Buy Suzlon Energy Ltd for the Target Rs 65 by Motilal Oswal Financial Services Ltd
India wind installations to reach new high
* Attractive valuation with improving earnings visibility: Suzlon’s (SUEL) stock price has corrected 31% over the past three months and is currently trading at 17.5x FY28E EPS, a 20% discount to its one-year fwd mean -1SD of 22x. Given the seasonal nature of earnings with 2H typically contributing 60-65% of annual EBITDA, we expect earnings momentum to strengthen in 2HFY27 as deliveries are expected to rise to 2.1GW from est. 1.2GW in 1H.
* Strong order book and earnings growth outlook: The company’s order book stood at 5.9GW as of 1QFY27-end (~1.3GW of order inflows in FY27YTD), providing 100% visibility on our estimated deliveries through 3QFY28. We estimate SUEL to deliver EBITDA CAGR of 22% over FY26-28E.
* Wind capacity additions on track to meet FY27 targets: India added ~3GW of wind capacity in 1HFY27. Historically, as 2H installations have been 1.5x those in 1H, the implied addition of ~4.5GW in 2HFY27 would take FY27 additions to ~7.5GW, in line with the MNRE’s expectation of 7.5-8.0GW.
* Evening peak demand strengthens the case for wind: Rising power demand, particularly during evening peak hours, should support greater deployment of wind capacity through wind-solar hybrid and FDRE projects. As highlighted in the EAC-PM paper (Jul’26), average May evening peak prices rose from INR8.08/kWh in 2023 to INR9.40 in 2025 and INR9.71 in 2026. We believe strong merchant power prices in late evening reinforce the economic case for wind capacity.
Execution-led growth with new opportunities
* Strong order book provides visibility through 3QFY28: We build in 35% YoY rise in FY27 deliveries at 3.3GW (1.2GW in 1HFY27 and 2.1GW in 2HFY27), followed by 3.8GW in FY28E. Its order book stood at 5.9GW as of 1QFY27- end (~1.3GW of order inflows in FY27YTD), providing 100% visibility on our estimated deliveries through 3QFY28.
* 22% EBITDA CAGR backed by strong delivery visibility: Given the seasonality of earnings with 2H typically contributing 60-65% of annual EBITDA, we anticipate earnings momentum to strengthen in 2HFY27, aided by a significant ramp-up in deliveries. Supported by strong delivery visibility and a robust order pipeline, we expect EBITDA CAGR of 22% over FY26-28E.
* Three new growth engines – repowering, exports and DevCo: SUEL’s DevCo model has gained strong traction, with 600MW+ of orders booked within four months of FY27, accounting for 60% of total orders. In India, repowering presents a potential opportunity of up to 25GW, given that a major portion of the existing wind fleet was commissioned 10-20 years ago and SUEL expects to secure confirmed repowering orders by FY27-end, with opportunities likely to scale up in the next 2-3 years. Internationally, SUEL is evaluating export opportunities in Europe, Australia, Latin America and Southeast Asia, with Australia and Europe emerging as promising markets.
Valuation and view
* SUEL’s stock price has corrected 31% in the last three months and is now trading at 17.5x FY28E EPS, 20% lower than one-year fwd mean -1SD of 22x.
* We reiterate our BUY rating with a TP of INR65, based on 30x FY28E EPS, a slight premium to its historical average two-year fwd P/E of 27x. SUEL stands to benefit from regulatory tailwinds mandating local content (ALMM for wind), a robust order book providing strong revenue visibility, and execution improvements through proactive land acquisition and EPC expansion initiatives.
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