Shares of Suzlon Energy Ltd. fell as much as 9% on Friday, October 30, as the stock will react to its September quarter results, that were reported after market hours on Thursday.
During its earnings call, Suzlon Energy’s management revised the full year EBITDA margin guidance down to 15% plus-minus, from the earlier guidance of 17% plus-minus.
For the second quarter, the Wind Turbine Generator (WTG) contribution margins declined to 21.2% from 26.9% last year due to non-recurring opex (100 bps), consumer / scope mix (150-180 bps), and 50 bps from forex and commodity volatility.
The management expects the WTG contribution margin to now be between 22% to 23% for the full financial year, expecting normalization as external factors resolve.
India’s market is projected to reach 15 GW by financial year 2035 and Suzlon is confident of achieving 40% market share target by that period.
For the September quarter, Suzlon Energy’s net profit appears to have declined by 69% from last year, but that appears so due to an exceptional gain in the base quarter, which resulted in the profit back then to be elevated.
Revenue for the quarter increased by 26% from last year. Operating performance turned out to be weak, with Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter remained flat at ₹713 crore, while margins narrowed to 14.7% from 18.7% last year.
Suzlon Energy Shares Are A Buy Or Sell?
Brokerage firm Nuvama said that it has cut its financial year 2027 and 2028 Earnings Per Share (EPS) estimates by 9% and 7% respectively, and is also introducing estimates for financial year 2029 to account for the EPC-led increase in costs.
The brokerage has maintained its “hold” rating on Suzlon but has slashed its price target to ₹41 from ₹51 earlier.
Suzlon Energy is a key beneficiary of rising share of FDRE / RTC / hybrid tenders and PSU-led projects, backed by its strong C&I and captive exposure. However, we expect the wind industry to plateau at 8-10 GW over two-three years. NUVAMA ON SUZLON ENERGY
Nuvama went on to write that while Suzlon’s financial year 2031 targets are encouraging, the growth is likely to be back-ended and dependent on the success of DevCo, where it is a late entrant.
Investec maintained its “buy” rating on Suzlon Energy with a price target of ₹56, stating that they are expecting annual order intake of 3.5 GW – 3.6 GW and retain their execution estimates for this and the next financial year.
The brokerage expects Suzlon Energy’s revenue to grow at a compounded annual growth rate of 27% and a PBT CAGR of 21% over financial year 2026-2028. Its net cash position, strong RoE and RoCE, along with attractive valuations keep them bullish on the stock.
ICICI Securities has also cut its price target on Suzlon Energy to ₹55 from ₹65 earlier but maintained its “buy” recommendation on the stock citing favourable valuations.
It wrote in its note that the company is laying the ground work for its next leg of growth, adding that the wind turbine deliveries are pacing well and commissioning is also now catching up with deliveries.
“Suzlon’s margins take a hit partly due to commodity and forex inflation and higher expenses on spend towards Suzlon 2.0. Though the impact is likely to be a passing cloud, the near-term numbers are expected to be impacted,” ICICI Securities wrote in its note.
Despite the subdued results, majority of the analysts tracking Suzlon continue to have a “buy” recommendation on it. 10 out of the 11 analysts covering the stock have a “buy” rating on it, while one has a “hold” rating. None of the analysts have a “sell” rating on the stock. The consensus estimates of price targets implies an upside potential of 56.1% from current levels.
Investec, ICICI Securities, and UBS have “buy” ratings on Suzlon Energy, with price targets of ₹56, ₹55 and ₹58 respectively.
Shares of Suzlon Energy are trading 8.7% lower on Friday after the multiple price target cuts, at ₹33.69. The stock is down 35% on a year-to-date basis.
Suzlon Energy shares are a buy or sell? Stock falls 9% after multiple price target cuts