Buy Suzlon Energy Ltd for the Target Rs 65 by Motilal Oswal Financial Services Ltd
New orders and execution key drivers in FY27
* Financial performance:
Suzlon Energy (SUEL)’s consolidated revenue missed our estimate by 7% at INR54.9b as deliveries came in at 830MW (8% lower than our est.). EBITDA came in 5% below our estimate at INR9.6b with an EBITDA margin of 18%. APAT was reported at INR7.6b, beating our estimate by 20% on account of lower-than-expected tax liability. FY26 deliveries stood at 2.5GW (+58.4% YoY) and revenue/EBITDA/APAT at INR167/30/21b (+54%/63%/42% YoY).
* Key things we liked about the result:
1) Achieved FY26 guidance of ~60% YoY growth across key KPIs
2) EPC share in the orderbook increased to 28% vs. 22% at 2QFY26-end, with management targeting 50% by FY28, which should support execution and deliveries
3) NTPC is increasingly shifting toward turnkey EPC contracts, with ~215MW already awarded in Andhra Pradesh and additional opportunities of ~2.5GW expected
4) management guided India wind installations at 8GW/10GW in FY27/FY28, scaling up to ~15GW by FY30/FY31; and 5) on the Andhra Pradesh agreement, SUEL’s 2015 development pact has now been extended by two years, and of the 2.1GW development rights, 775MW already has a signed PPA awaiting APERC approval (likely to be converted into an FDRE project), while the remaining 1,325MW is expected to be monetized through EPC contracts, with order closures likely from Jun’26 onwards
* Key monitorables:
1) the pace of fresh order inflows, project deliveries, and installations across FY27/FY28, which will be critical for sustaining current growth momentum
2) WTG segment’s EBITDA margin remained flat QoQ at 13.7% in 4QFY26 vs. the stronger ~15–16% levels seen during 1Q/2QFY26
3) With EPC business continuing to gain share in the overall order mix, working capital may see some pressure.
* Valuation and view:
We arrive at our TP of INR65 by applying a target P/E of 27x to FY28E EPS, in line with its historical average two-year fwd P/E of 27x.
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