Buy Suzlon Energy; target of Rs 76: ICICI Securities

ICICI Securities's research report on Suzlon Energy

Suzlon resumed operations at its Puducherry plant last year. Its capacity stands at 4.5GW. It is adding three new blade manufacturing plants (one each in Gujarat and Karnataka; location for 3rd plant is yet to be finalised). This will help fasten the execution of its existing OB and help it serve future orders with better proximity to projects. It is also taking up digitised and AI-enabled smart manufacturing across its plants to drive efficiency and quality. It expects capex of INR 5-5.5bn annually for the next 2-3 years. We expect the initiatives to help Suzlon strengthen its positioning as a player capable of supplying quality wind turbines at scale, on time and with long-term service. It plans to increase the share of EPC from 20% to 50% by FY28. The company is also eyeing export and repowering opportunities.

Outlook

Suzlon delivered strong operating metrics in H1FY26. However, the news flow around the new renewable capacity addition has been under weather. In this backdrop, Suzlon’s management highlighted the key positives during its investor day. It reiterated its - a) strong orderbook (OB), b) strong order inflow (OI) outlook with equipment yet to be awarded for 18GW of under development capacity, c) its readiness to tap export markets, d) capex plan of INR 5-5.5bn per annum for next three years, and e) adding three new blade manufacturing plants. We believe its existing OB and near-term order inflow provide medium-term visibility. Suzlon remains the key beneficiary of new wind builds amidst the government tightening the screw on imports. Stock is trading at 27x FY27E EPS. Reiterate BUY with TP of INR 76, valuing the stock at 40x FY27E EPS.