Shares of Suzlon Energy Ltd are under focus as the renewable energy solutions provider reported cancellations and modifications in its order book since January 2024. Despite these adjustments, the company stated that its overall order position remains robust.
In a regulatory filing with the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), Suzlon disclosed that its current order book stands at 5,622 MW, an increase from the 5,523 MW reported on January 28. However, the company confirmed a few order cancellations and modifications.
Key changes include the cancellation of a 99 MW order from Vibrant Energy and the reduction of a 201.6 MW order from O2 Power Private Limited (Teq Green Power XI Private Limited) to 100.8 MW. Additionally, a customer opted not to proceed with a 100.8 MW order for the 3 MW series. These orders were originally secured between May 2023 and December 2023.
Suzlon emphasized that these adjustments will not materially impact its order book position, as new orders continue to flow in. The company remains optimistic about its growth trajectory.
Analyst Projections and Industry Outlook
Geojit Financial Services, in its March 24 note, predicted that Suzlon Energy’s order inflows would remain strong in the near term. The firm also highlighted an expanding commercial and industrial (C&I) portfolio as part of the company’s growth strategy.
While wind turbine generator (WTG) deliveries have been robust, installation progress has faced hurdles due to execution challenges, such as transmission delays and land-related issues. Geojit noted that Suzlon’s 9MFY25 installation-to-delivery ratio stands at 0.25X, reflecting a slowdown in installations. Consequently, the firm revised its revenue estimates for FY26 and FY27 downward by 10% and 21%, respectively, to align with guidance and account for execution risks.
Despite these challenges, Suzlon is expected to witness a 70 basis point expansion in EBITDA margins, driven by a favorable project mix and improving profitability in the WTG segment. Geojit projects Suzlon’s profit after tax (PAT) to grow at a compound annual growth rate (CAGR) of 30% between FY25 and FY27. The firm valued Suzlon at a price-to-earnings (PE) multiple of 40 times its FY27 earnings per share (EPS), setting a target price of Rs 71 per share.
MOFSL’s Valuation and Price Target
Motilal Oswal Financial Services (MOFSL) has also set a target price of Rs 70 per share for Suzlon Energy, slightly above the historical two-year forward PE average of 27 times. The brokerage firm acknowledged that earnings momentum is improving for Suzlon, justifying the valuation premium.
MOFSL pointed out that while valuations in the broader capital goods sector have moderated, they remain elevated due to strong earnings growth, a healthy order book, improving cash flows, and a favorable industry outlook.
Despite recent order cancellations and execution challenges, Suzlon Energy remains on a growth trajectory, supported by a strong order pipeline and improving financial performance. Analysts continue to hold a positive outlook on the company, citing favorable market conditions and improving profitability in its core business segments.
