Suzlon shares today: gain 3%, Motilal sees 21% upside potential, Motilal initiates coverage with buy rating

Shares of Suzlon has gained nearly 3 per cent on Tuesday after domestic brokerage Motilal Oswal initiated coverage on the stock with a buy rating at ₹70, nearly 21 per cent upside potential from the previous close of ₹57.91.

Suzlon shares traded 1.19 per cent positive at ₹58.60 on the NSE as at 9.59 am, after hitting a high of ₹59.48.

Analysts of Motilal Oswal think that Suzlon is reasonably priced, given an estimated EPS CAGR of 63 per cent over FY24-27, significantly surpassing domestic capital goods peers ABB India (23 per cent), Siemens (20 per cent), Thermax (17 per cent), and CG Power (26 per cent), and global peers such as SANY (26 per cent). On PEG ratio, Suzlon is favorably trading at FY26E PEG ratio of 0.6x, below other domestic capital goods peers such as Thermax (2.5x), ABB India (6x), and CG Power (1.9x).

Motilal says that wind energy is expected to account for 20 per cent of the country’s renewable energy (RE) mix by 2030, against 39 per cent in the US and Germany, 33 per cent in China, and 42 per cent in the UK, emphasising the need for more focus on wind energy development.

Suzlon is a global leader in wind energy with an installed capacity of 20.9 GW across 17 countries. It is India’s top wind energy service provider with the highest installed capacity of 15GW (over competitors like Siemens Gamesa (8.9 GW), Vestas (3.4 GW), and INOX (3.1 GW), operating with a vertically integrated structure, including in-house research & development and manufacturing facilities.

Motilal Oswal emphasised Suzlon’s strong leadership in the O&M segment further strengthens its competitive edge. The brokerage expects the company’s order book execution (or deliveries) to be 3.2GW in FY27.

On the financial front, Motilal estimates Suzlon’s EBITDA margins to remain healthy at ₹14-16 per cent in FY25/FY26/FY27 and stressed that the company is well positioned to benefit from its significant tax shield arising from unabsorbed depreciation and brought-forward losses.

It also expects net cash position to rise further by FY27 given limited capex needs in the near-term.

However, the domestic brokerage highlighted a few risk factors including increasing competition from Chinese and European players, potential pressure on realisations/ margins for wind turbine generators (WTGs), dependency on ISTS waiver for project economics, technological changes leading to product obsolescence, delays in project execution, volatility in raw material prices, operational and overhead costs.