Shares of renewable energy major Suzlon Energy surged as much as 6.5% to an intraday high of Rs 59.25 on the BSE on Tuesday, extending gains for a fourth consecutive session. The stock has rallied nearly 11% over the past four trading sessions.
During its investor meet recently, Suzlon Energy laid out an ambitious roadmap for FY31, aiming to transform itself from a wind-focused company into a broader renewable energy platform. The company is targeting revenue growth of more than 25% CAGR over the period, while strengthening its leadership position in the domestic wind energy market.
As part of its growth strategy, Suzlon plans to increase its share of India's wind market to over 40% from around 33% currently.
Following the development, a host of brokerages have issued bullish calls on the stock, with some calling the firm ‘most investible’ when compared with other competitors.
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Motilal’s take on Suzlon Energy
While the long-term vision is encouraging, Motilal noted that investors are likely to remain focused on execution, capital allocation discipline, and the company's ability to manage working capital and leverage.
JM Financial on Suzlon Energy
Like Motilal, JM Financial has the same rating and target price. The brokerage said the key differentiator now is "Suzlon 2.0" which marks a significant shift from being solely a wind turbine supplier to becoming an integrated renewable energy developer. The company is expanding across renewable technologies and strengthening its asset management services (AMS) business through a renewable energy project development company (DevCo), which could significantly increase revenue potential per megawatt.
According to JM Financial, Suzlon's target of expanding its AMS portfolio to 70 GW from the current 18 GW represents the highest-quality earnings stream within the business mix. The brokerage believes that if execution remains strong, the expansion of the 70 GW-plus AMS platform and integrated renewable energy solutions business could emerge as a more important earnings driver over the next three to five years than turbine deliveries alone. This, in turn, could improve revenue visibility, margins and valuation multiples.
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Suzlon Energy share price target
Systematix Institutional Equities also has a 'Buy' rating on the stock with a target price of Rs 71 per share, indicating an upside potential of nearly 29%. Centrum, meanwhile, has a 'Buy' call with a target price of Rs 75 per share, implying a potential upside of about 36%.
The company posted a 6% year-on-year decline in consolidated net profit for the fourth quarter at Rs 1,114 crore, compared with Rs 1,182 crore in the same period last year.
Revenue from operations, however, rose sharply by 45% year-on-year to Rs 5,468 crore during the quarter. On a sequential basis, net profit jumped 150% from Rs 445 crore reported in the December quarter.
