Stock Market Today: Shares of Suzlon Energy, India’s largest renewable energy solutions provider, hit the 5% upper circuit limit at ₹62.22 per share in trade on Tuesday, November 19. This marks the third consecutive session of gains for the stock.
Today’s jump in Suzlon Energy shares can be attributed to a rating upgrade by Morgan Stanley. The global brokerage firm upgraded the stock to ‘overweight’ from ‘equal weight’ and maintained its target price of ₹71, citing that the recent sharp correction in stock presents a buying opportunity.
After a remarkable rally from March 2023 to September 2024, during which the stock surged 913%, it struggled to sustain momentum in the following months as investors appeared to take profits after significant gains.
In October, the stock saw a 16% correction, its steepest monthly drop since February 2023. Thus far in the current month, it has declined by an additional 7%. As a result, the stock is now trading 27.65% lower than its recent one-year high of ₹86.
According to the brokerage, this steep correction creates an opportunity for shareholders to accumulate the stock. The brokerage believes Suzlon has a strong business moat and coupled with the growth opportunities for wind Original Equipment Manufacturers (OEMs), these are key factors supporting its bullish outlook on the company.
Although the brokerage has revised Suzlon’s sales volume for FY2025 down to 1.3 GW from the earlier estimate of 1.5 GW, it has kept the total sales volume for FY2025-2027 unchanged at 7.15 GW.
The brokerage also highlighted that Suzlon’s large order backlog of 5.1 GW is expected to be executable within the next 24 months, positioning the company as a key beneficiary of India’s energy transition.
Stock is currently priced at attractive valuations
Domestic brokerage firm Geojit Financial Services has also retained its ‘buy’ rating on Suzlon in its latest report with a target price of ₹68, citing that the recent correction has positioned the stock at attractive valuation.
The brokerage forecasts a 67% CAGR in Wind Turbine Generator (WTG) deliveries for FY24-27E, based on the management’s expectations for wind installations in India (5/7/10 GW for FY25E/26E/27E).
However, considering execution risks such as land acquisition challenges and transmission infrastructure deficiencies, Geojit expects FY24-27E EPS growth to be at a 61% CAGR.
“With the ROE expected to expand to 25% by FY27E, we believe Suzlon’s story is only developing. Recent order wins indicate a preference for the turbine manufacturer among state, PSU, and C&I clients, and the recent acquisition of Renom Energy can enable tapping into over 32 GW of non-Suzlon O&M opportunities, ” said the brokerage.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
