Morgan Stanley in its latest note reportedly upgraded Suzlon Energy’s stock to ‘Overweight’ from ‘Equal-weight’ and suggested a revised target price of Rs 71 from Rs 78 earlier. The brokerage finds the recent steep correction on the counter is an opportunity to accumulate stock, as it sees Suzlon Energy Ltd as beneficiary of India’s energy transition.
Suzlon Energy shares are down 15.88 per cent in the past one month. Despite this, the stock is up 54.37 per cent in 2024 so far. On Monday, the scrip closed at Rs 59.40 apiece. Morgan Stanley’s revised target price for Suzlon Energy still suggests a 19.52 per cent potential upside over the prevailing price.
Suzlon Energy, Morgan Stanley said, has a strong business moat, with a large 5.1GW order backlog executable over the next 24 months. Morgan Stanley, ET NOW reported, said Suzlon Energy has been Prudent in taking up orders with higher offtake visibility. It said India’s competitive intensity is lower and expects Suzlon Enrgy’s market share to improve to 35-40 per cent by FY27.
The brokerage said India’s wind addition may drive 32GW or $31 billion of orders over FY25-30 for wind OEMs and that the recent steep decline in the Suzlon Energy stock price is an credible opportunity to accumulate the stock.
Earlier, Ventura Securities in a note said Suzlon Energy Ltd is a great business but not at a great price. This brokerage had suggested a ‘Sell’ rating on the renewable energy solutions provider with a price target of Rs 50 over the next 24 months.
This was against a Suzlon Energy price target of Rs 81 that JM Financial suggested for the next 12 months and Rs 67 that Nuvama Institutional Equities assigned for the same timeframe.
Over FY24-27, Ventura expects Suzlon Energy’s revenue to grow at 47.6 per cent at Rs 20,987 crore, Ebitda at 47.5 per cent to Rs 3,304 crore and net earnings at 66.2 per cent to Rs 3,030 crore, compounded annually. respectively.
“Ebitda margins are expected to hold steady at 15.7 per cent, while net margins are projected to improve by 432 bps to 14.4 per cent. Suzlon Energy has somehow managed to maintain a net debt-free balance sheet and generate positive FCFF,” Ventura said.
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