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Suzlon Energy Ltd (Suzlon) reported 1QFY25 net revenue of INR 20.2bn, +50%/-8%/+10%/- 5% YoY/ QoQ/ JMFe/ Cons. EBITDA came in at INR 3.7bn, +86%/ +4%/+55% /+55% YoY/ QoQ/ JMFe/ Cons with improvement in margin to +18%/+15%/13% 1QFY25/ 1QFY24/ JMFe due to higher volume of equipment supplies and lesser execution. Adj. PAT came in at INR 3bn, +226%/+8%/+86%/+24% YoY/ QoQ/ JMFe/ Cons due to higher interest income. We believe that gradual building of momentum for higher execution, healthy order book, morehealthy bid pipeline, strengthening of balance sheet and the organization are driving the company for the next-level of growth (Wind blows again as the sun shines). We maintain our BUY rating on the stock with a TP of INR 71 (based on a 35x FY26E EPS).

*  Segment Performance: On account of strong deliveries (274MW/135MW for 1QFY25/1QFY24), revenue and EBITDA margin in WTG (wind turbine generator) business for 1QFY25/1QFY24 stood at INR 14.9bn/ INR 8bn (+86% YoY) and 10.4%/5.5%. The installed capacity base for the Operations & Maintenance Services (OMS) business increased to 14.8 GW in 1QFY25 from 14.2 GW in 1QFY24. Revenue and EBITDA margin for OMS during 1QFY25/1QFY24 stood at INR 4.4bn/ INR 4.4bn and 43.6%/36.2%. The EBITDA margin for the foundry and forging division was 10.9% during 1QFY25 vs. 12.5% during 1QFY24.

*  Strong tailwinds: India is committed to achieve 500 GW (50% RE in energy mix) of nonfossil fuel capacity by 2030 which includes 100 GW (122 GW by FY32) of wind capacity. Evolution of structure of projects from vanilla solar/wind to RTC, FDRE and other combinations require wind component (higher than solar in most of the cases) in all the future projects. The management believes in bidding of 10 GW of wind-related tenders annually till FY27, installations of 25GW of wind projects till FY28 and demand of 78GW+ RE projects from C&I segment by FY30. To expedite wind energy additions, various policy initiatives have been taken viz. state-specific sub-bids for wind, pooling of tariff for uniform RE tariff, RPO (RE purchase obligations) trajectory (29.91% in FY24 to 43.33% in FY30 with wind-specific RPO), waiver of ISTS charges for 25 years for RE projects commissioned up to 30 Jun’25 and others.

*  Order book: Suzlon has recorded largest-ever order book of 3,817 MW during 1QFY25 (1,433 MW in 1QFY24) with a diversified mix (88% 3MW series; 66% C&I customers; 67% non-EPC scope; spread across 7 States). As the company becomes eligible for bidding PSU tenders e.g. NTPC, we expect it to book healthy orders during FY25 and beyond, also supported by likely moderation in competition. (Wind energy manufacturing: Push for indigenisation)

*  Orders’ pipeline: The company with its positive net worth has started bidding for PSU (including NTPC) tenders. Since 1 Jan’23, a total of 56 tenders with 55.4GW for utilityscale vanilla wind (including 1,110MW NTPC Gujarat) and various wind-combinations have been issued, which have an estimated wind component of at least 20GW, giving a healthy pipeline of opportunities going forward. This excludes opportunities from C&I segment.

*  Project execution, so far: Indian added 770MW of wind energy capacity during 1QFY25 vs. 1140MW during 1QFY24. Suzlon commissioned 71MW of projects. However management stated that 160MW of projects are ready for commissioning. Going forward, the company is in advance stage of discussion for co-developing wind energy projects by getting exclusive rights for land (~2.7GW potential) in Rajasthan.

*   Scaling up of execution: Current order book of 3,817 MW is due for execution up to FY26, with a major part to be delivered during FY25 as per the guidance from the Management. The company expects commissioning of 5.0-5.5GW in FY25 (vs guidance of 4.5-5.5 GW in 4QFY24) of projects during FY25 at country level, which could increase to 6.5-7.0 GW in FY26 and gradually to 8-9 GW by FY27. Going forward, an increasing share of C&I projects (66%), diversity in orders from 7 States, higher share of non-EPC orders (67%) and a favourable policy environment bode well for accelerated execution. However, availability of land (particularly in Karnataka), ROW (Right of Way) and capable BoP (balance of plant) players remain challenges for a significant scale-up.

*   Miscellaneous - Framework agreement with CESC: Company books orders only when it is firm along with receipt of advance

*  Execution of NTPC projects is better since they place equipment orders only after completing many BoP works

*  Company in process of expanding existing 3.5GW manufacturing capacity

*  Market has more capable IPP today. So, IPP customers are preferred - Current order book of 3,817 MW is due for execution up to FY26, with a major part to be delivered during FY25 as per the guidance from the Management

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