In a bullish endorsement of Suzlon Energy, Anand Rathi has reaffirmed its Buy call on the company, highlighting significant growth prospects in the wind energy sector. This recommendation follows a recent visit to Suzlon’s Daman plant, a pivotal facility that manufactures nacelles for wind turbines.
Suzlon’s Daman plant, operational since 2004, has delivered over 60 per cent of the 20GW+ wind turbines supplied globally. With its current rated capacity of 2.7 GW per annum and the potential to scale up to 3.1 MW, the plant stands as a cornerstone of Suzlon’s production capabilities.
To capitalise on the escalating demand for wind energy, Suzlon plans to expand its Daman plant’s capacity and is considering the phased reopening of its Pondicherry plant, which has a similar capacity. This expansion is crucial as India’s wind capacity installations are forecasted to rise to 8-9GW by FY27, compared to 3.3GW in FY24. The planned upgrades will enable Suzlon to meet the growing demand effectively.
In terms of future deliveries, Suzlon’s order book as of May 2024 stands at 3.3GW. The company is projected to deliver 1.5GW and 2.2GW in FY25 and FY26, respectively, up from 0.7GW in FY24. This growth trajectory underlines Suzlon’s strategic positioning to benefit from increasing orders from utilities and the commercial and industrial (C&I) segments.
Anand Rathi’s valuation maintains a 12-month target price of Rs58 for Suzlon, reflecting a 35x FY26e P/E ratio. This target price is grounded in the company’s impressive expansion plans and favourable market dynamics. The brokerage will reassess its projections following Suzlon’s Q1 results.
However, the investment outlook has risks. Potential challenges include adverse government policies, a slower-than-expected pick-up in wind turbine installations, and heightened competition in the sector. Despite these risks, Anand Rathi’s optimistic outlook on Suzlon’s growth potential remains strong.
