Buy Suzlon Energy Ltd For Target Rs. 70 By Bajaj Broking
Macro Tailwinds: India's Renewable Boom- India has set a target of 500 GW of non-fossil fuel capacity by 2030. Wind energy is a critical component of this plan. The Indian wind power market, which reached 49.8 GW in 2024, is projected to grow to 127.9 GW by 2033, representing a remarkable CAGR of 11.04% . Suzlon, with its domestic manufacturing and leading position, is perfectly poised to capture a significant share of this growth.
Orderbook & Revenue Visibility - A strong and expanding orderbook underscores Suzlon’s future revenue potential. As of Q1 FY26 (June 30, 2025), the company reported a record firm orderbook of 5.7 GW, reflecting robust demand and execution visibility. Key recent additions include a 100.8 MW order from Sunsure Energy in April 2025 and a landmark 838 MW order from Tata Power Renewable Energy in September 2025. This solid pipeline translates into more than 2.5 to 3 years of assured revenue visibility, offering a clear growth trajectory and lending strong support to our optimistic financial outlook.
Revenue Mix Shift: WTG vs. O&M - The revenue mix is strategically shifting, enhancing both growth and stability. While WTG/EPC sales account for the bulk of the revenue (~80.5% in Q4 FY25), the O&M business is a high-margin, annuity-like stream. The O&M segment boasts a superior EBITDA margin profile, contributing approximately 26% of the company's total operating profit in Q4 FY25, despite comprising a much smaller portion of revenue. This predictable cash flow stream reduces cyclicality and supports high cash generation and funding of capex.
Inorganic Growth: Renom Acquisition - Suzlon’s acquisition of a 76% stake in Renom Energy Services for ?660 crore represents a strategically significant move to strengthen its market positioning. Renom, a multi-brand O&M service provider servicing across power generation models with 2.5 GW of assets under management at the time of the transaction, opens the door to the sizeable 32 GW non-Suzlon wind energy service market. Beyond expanding Suzlon’s O&M footprint, the deal creates meaningful synergies through cross-selling opportunities and operational efficiencies, positioning the company to capture incremental revenue and enhance profitability within its highmargin O&M business.
Capex, R&D & Operating Leverage - Suzlon has guided for a planned capex of ?400–450 crore in FY26, with a significant allocation of ?225– 250 crore dedicated to R&D. Far from being a mere expense, this investment is aimed at strengthening the company’s competitive edge by expanding its product portfolio through the development of more efficient, export-ready turbine designs. At the same time, the focus on R&D, coupled with backward integration via SE Forge, is expected to improve utilization levels, absorb fixed costs, and enhance operating leverage—ultimately driving stronger margins and long-term profitability.
Valuation – Suzlon demonstrated 1/3rd order win ratio and participation in large government renewable energy orders provide visibility on sustained growth and market share gains. Having turned net cash, Suzlon now enjoys a significantly stronger balance sheet, reducing financial risk and enabling greater operational flexibility. While low promoter holding remains a concern, continued execution strength and governance improvements are mitigating factors. Company’s strong fundamentals and improving financial profile support a BUY recommendation with a target price of ?70 at a target multiple of 33x P/E and 24x EV/EBITDA on FY27E earnings
Above views are of the author and not of the website kindly read disclaimer
