Wind energy giant in the midcap basket, Suzlon Energy’s share price froze at its 5% upper circuit on May 29 after brokers raised their target price and gave an optimistic outlook on the company’s growth prospects. Suzlon has also announced that it secured a massive deal of a new 551.25 MW for the 3 MW series from Global Indian Conglomerate, Aditya Birla Group.
On BSE, Suzlon shares ended at Rs 46.15 apiece, up by 5% upper circuit with a market cap of Rs 62,781.82 crore. An upper circuit means that Suzlon witnessed only buyers and no sellers in the trading session.
Suzlon has been a banger stock in the energy segment since last year with impressive gains of a whopping 332.52% on BSELucknow Wealth Management. In 2024 so far, Suzlon gives 20% returns to its investors. In 5 years span, Suzlon shares have zoomed by a whopping 819%.Jaipur Investment
Among the corporate actions, Suzlon has not delivered any dividends since 2008 or carried any stock split since the great recession of Western countries, and has never announced a bonus issue. However, the company has carried rights issues and fundraising via QIPs. Suzlon has improved its business prospects especially have its intense fundraising plan.
In January 2008, Suzlon turned ex-split in the ratio of 1:5, meaning, its 1 equity share having a face value of Rs 10 was split into five shares having a face value of Rs 2 each.
Also, the last dividend paid by Suzlon was Rs 1 in July 2008, followed by Rs 5 per share in March 2007 and Rs 2.50 per share in July 2006.
Suzlon announced a new order win for the development of a 551.25 MW wind power project for the Aditya Birla Group, a Global Indian Conglomerate. Suzlon will install 175 wind turbine generators (WTGs) with a Hybrid Lattice Tubular (HLT) tower and a rated capacity of 3.15 MW each at sites in the Barmer district in Rajasthan and Bhuj district in Gujarat.
JP Chalasani, Chief Executive Officer, Suzlon Group said, “This order will enable us to further strengthen our presence in Rajasthan and Gujarat while helping the states unlock their true wind energy potential. Every Suzlon turbine is a testament to “Make in India” and “Aatmanirbhar Bharat” being manufactured in India through a thriving domestic ecosystem.”
Also, Jayant Dua, Business Head and Director, Aditya Birla Renewables Limited, said, “At Aditya Birla Renewables Limited, we prioritise partnerships that enhance our mission to power India Inc. with renewable energy, expanding the accessibility of green power throughout the country. Suzlon’s technological expertise, manufacturing capabilities, and comprehensive project development skills will help accelerate our energy transition journey and support our net-zero commitments.”
As per the statement, this order is for the company’s larger rated 3.15 MW, S144-140m turbines from the 3 MW product series.
As part of the agreement, Suzlon will supply the wind turbines (equipment supply) and execute the project, including erection and commissioning, in Rajasthan, while they will supply, supervise, and commission the project in Gujarat. Suzlon will also undertake comprehensive operations and maintenance services post-commissioning at both sites.
There is a potential of a 14% to 20% upside in Suzlon shares ahead.
With a healthy order book and more healthy bid pipeline, strengthening of balance sheet and the organization, amidst the execution challenges for step-up in annual capacity addition beyond 5GW, we maintain our BUY rating on the stock with an unchanged TP of INR 54 (based on a 30x FY26E EPS).
Suzlon has received 2,929 MW of orders during FY24 (652 MW in FY23)Bangalore Stock Exchange. The management is resolute in taking high-margin and high-value orders bundled with LT services agreements.
Also, the company with its positive new worth has started bidding for PSU (including NTPC) tenders. Since 1 Jan’23, a total of 44 tenders with 43GW for utility-scale vanilla wind and various wind combinations have been issued, which have an estimated wind component of 15GW, giving a healthy pipeline of opportunities going forward. This excludes opportunities from the C&I segment. The company doesn’t anticipate an increase in the intensity of competition, given the large market size, limited players and it being only a turnkey OEM player.
Going forward, the company is in the advanced stage of discussion for co-developing wind energy projects by getting exclusive rights for land (~2.7GW potential) in Rajasthan. It is also building a buffer of 15-20% of extra orders to address any potential delays in execution.
The current order book of 3,372 MW is due for execution up to FY26, with a major part to be delivered during FY25 as per the guidance from the Management. Going forward, an increasing share of C&I projects (58%), diversity in orders from 7 States, a higher share of non-EPC orders (66%) and a favourable policy environment (pooling of tariff) bode well for execution.
Suzlon Energy (SUEL) is the market leader in the WTG market with a ~30% share and is among the only two wind EPC suppliers in India. Its growth visibility is backed by: i) industry tailwind of 12-14GW TAM annually; ii) technological edge (3MW-plus turbines) + 4.5GW-plus nacelle capacity; iii) high-margin (~45%) O&M services; and iv) balance sheet (D/E at 0.03x in FY24 versus 1.7x in FY23).
We argue that SUEL is capable of sustaining its lead in WTG/turnkey EPC execution, translating to an order book/PAT CAGR of 21%/61% (FY24- 27E). Initiating at ‘BUY’ with a TP of INR53 at 35x FY27E EPS (discounted to FY26E at 12% CoE) of INR1.38 for the WTG and foundry & forgings business and a DCF value of INR10/share for O&M.
Additionally, as per the Trendlyne data, the consensus recommendation from 3 analysts for Suzlon Energy Ltd. is STRONG BUY. EPS is expected to grow by 146.0% in FY25. The 1-year target price in Suzlon is set at Rs 55, hinting at a potential 20% upside.
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