Why You Should Consider Buying Suzlon Energy Shares Now: JM Financial Raises Target Price to Rs 81

In an encouraging update for investors, JM Financial has recently raised its target price on Suzlon Energy shares, moving it up to Rs 81 from Rs 71.

Why You Should Consider Buying Suzlon Energy Shares Now: JM Financial Raises Target Price to Rs 81

JM Financial on Suzlon Energy has recently surged the target price to the amount of Rs 81 against Rs 71 in recent times. In a positive direction for investors, the renewable energy titan has had JM Financial initiate its ‘Buy’ recommendations with Suzlon Energy’s robust order book and a strong bid pipeline as well as a strengthening balance sheet. Nuvama Institutional Equities has advised a more cautious approach with a ‘Hold’ rating, with an estimated target price of Rs 67. Let’s look at what is driving these recommendations and why Suzlon might be an attractive pick for investors.

Growth Potential of Suzlon Energy: A Key Investment in Renewable Energy

One significant player in India’s rene Read morenable sector- Suzlon Energy, it is attracting positive attention today as well due to impressive quarterly performances lately. This group’s financial health and widening order book put the house in good stead for a much higher growth rate in times ahead.

Healthy Order Book with the Bid Pipeline

The healthy order book of Suzlon is seen as one of the critical reasons for raising the target price by JM Financial. As a result, its strong pipeline of bids will indicate ready-to-deliver capacity over rising demands in the space of renewable energy. More importantly, the healthy order book not only ensures future revenues of Suzlon but also creates a better positioning than all others to take up upcoming projects.

Improving Balance Sheet and Execution

Suzlon has been trying to strengthen its financial structure. This has been a good indicator for investors. According to JM Financial, the balance sheet is strengthening as the company gets better revenue streams and sticks to execution. Suzlon’s financial health is imperative as it gears up to the next level of growth in the renewable sector.

Operational Updates and Market Expansion

Suzlon Energy posted good progresses in the second quarter of FY25. The two quarters combined have adjusted profit after tax (PAT) put at Rs 200 cr; that is, its second quarter PAT increased YoY at 46%. It notably beatsJM Financial’s forecasted incremental year on year at 41 percent, thereby underlining more effective operational efficiencies as also going further in expansion.
India added 707 MW of wind energy capacity in the September quarter, much higher than 412 MW in the same period last year. Suzlon added 130 MW of new projects in Q2FY25, which showed good project execution, higher than 70 MW in Q1.
Suzlon’s cost escalation in Q2 was largely because of building operational capacity. Some key investments were the development of SAP systems for the company, reactivation of the Pondicherry facility, and strategy consultants to help with diversification. These are expenses that have added costs but show Suzlon’s efforts in building a business that will be ready for the future with a competitive edge in renewable energy.

Nuvama View: A Cautious 'Hold' with Target at Rs 67

While JM Financial remains positive on Suzlon, Nuvama Institutional Equities has factored in a more conservative side. Nuvama has placed a target price at Rs 67 with some caution in the light of uptick in Suzlon’s operational income and profit prices. The house has further factored in the acquisition impact of Renom besides ESOP charges for FY25 and FY26.
Despite its highly conservative view, Nuvama does acknowledge the truth that Suzlon has a significant lead over its peers in this duopoly market, particularly with regards to the EPC space, where it does more than 30% of the market share.

Medium- and Long-term prospects for Suzlon

Going forward, Suzlon Energy is poised to take advantage of government-led initiatives and the rising trend in hybrid renewable energy solutions. Its presence in the Commercial & Industrial (C&I) segment further strengthens its prospects, as it accounts for almost two-thirds of the order book in this market segment.
In the EPC services space, the duopolistic nature of the market shall act as a tailwind for the company, providing a preferred partner status to Suzlon for large-scale wind projects. With increasing mix of ‘Firm, Dispatchable, Renewable Energy (FDRE)/Round-The-Clock (RTC)/Hybrid’ in government tenders, Suzlon is well positioned to gain from the policy tailwinds favoring renewable solutions.

Key Takeaways for Investors

JM Financial’s Positive Outlook: The increased target price of Rs 81 reflects JM Financial’s confidence in Suzlon’s order book, bid pipeline, and balance sheet strength. Their ‘Buy’ recommendation suggests that Suzlon is ready for a new growth phase.
Strong Q2 Performance: Suzlon’s 46% YoY growth in PAT and increase in project execution in Q2FY25 signals operational resilience and execution capabilities, vital for future growth.
Capability Building Initiatives: Improving internal structures, adding capacity, and hiring strategy consultants are efforts made to future-proof Suzlon, thereby preparing it better for market performance.
Neutral View from Nuvama: The target price given by Nuvama was Rs 67 with a “Hold” rating, signifying caution. However, they recognize Suzlon’s strategic position and potential as a beneficiary in the EPC space.

Final Words

Suzlon Energy’s current update and strong financial position is something that investors looking to tap the renewable energy sector would definitely love. Though JM Financial is hopeful about its target price at Rs 81, it warns investors to be careful in Nuvama’s perspective. Suzlon, with this context, presents itself as a good long-term play because demand for renewable energy along with the support coming in from the government seems likely to make the market in that space more favorable going ahead. As the energy transition picks up pace, all the established market position, solid order book, and capability-building of Suzlon put it at an advantageous position for continued growth.

Disclaimer:

All above recommendations are of the market analysts. Neither the author, nor the brokerage firm, nor Stockstoday.in will be responsible for any loss arising out of any such decision taken based upon this information. All users are cautioned to take their own expert advice prior to making any investment decision.

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