This brokerage backs Suzlon shares despite a 31% fall in 6 months. Here’s why

The shares of Suzlon Energy (SUEL) have fallen by 31% in the last 6 months, significantly underperforming the Nifty 50 index, which fell over 9% during the same period. Despite this underperformance, domestic brokerage firm Motilal Oswal remains bullish on the stock due to its global leadership in wind energy.

The brokerage has initiated coverage on the stock with a ‘buy’ rating and a target price of Rs 70, indicating an upside potential of 21.5% from Tuesday’s closing price.

“SUEL 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 ~15 GW, operating with a vertically integrated structure, including in-house R&D and manufacturing facilities in India. SUEL's operations span wind turbine generator (WTG) sales, project execution, foundry and forging components, and operation and maintenance (O&M) services,” the domestic brokerage firm said.

Domestic factors also play an important role in the company’s growth. In March 2024, NITI Aayog proposed approving wind models only if key components like nacelles, blades, towers, and controllers are made in India. It also suggested a 60% local sourcing requirement by value.

If implemented, this move could drive strong growth for Indian manufacturers like Suzlon Energy.

Further, Motilal Oswal stated that Suzlon Energy is a key player in India’s wind energy growth story. With the country targeting 100 GW of wind capacity by 2030 (up from 48 GW in December 2024), the domestic brokerage firm believes that SUEL is well-positioned through its EPC and O&M businesses.

Suzlon leads the sector with 15 GW of installed capacity, ahead of peers like Siemens Gamesa and Vestas. Its acquisition of Renom Energy Services further strengthens its O&M capabilities, allowing it to service turbines from other OEMs and expand its market reach.

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By 2030, wind energy is expected to contribute 20% to India’s renewable energy mix, offering significant growth potential given the current low penetration. While solar-plus-storage models are emerging, ReNew, a leading RE firm in India, estimates that combining wind with solar and storage can lower energy costs by Rs 0.2–0.3/kWh and boost project returns by 1%. The rise of Firm and Dispatchable Renewable Energy (FDRE) models, which integrate wind, solar, and storage, is likely to drive further investment in wind energy.

On the financial side, Motilal Oswal expects Suzlon’s earnings to grow at a 63% CAGR over FY24–27, driven by economies of scale in its Wind Turbine Generator (WTG) segment. Additionally, EBITDA margins are expected to remain strong at 14–16%, supported by a tax shield from carried-forward losses (Rs 61 billion), which could help Suzlon avoid tax liability until H1FY27.

Despite increasing investments by global players, the brokerage firm believes that domestic firms like Suzlon are well-positioned to benefit due to their strong presence across the value chain.

Western OEMs are avoiding India’s EPC segment due to low margins, and Chinese players are largely absent. Assuming 8 GW installations in FY27, Suzlon’s estimated deliveries could reach 3.2 GW, with Inox Wind expected to supply 2 GW—leaving 2.8 GW up for grabs, underscoring the sector’s massive potential.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)