Suzlon Energy Ltd., a prominent player in the renewable energy sector, has recently faced a slight downturn in its share price amid broader market volatility. On March 28, 2025, the company's shares opened at Rs. 57.36, reaching a day-high of Rs. 58.40 before closing at Rs. 56.66, reflecting a decrease of 0.61% from the previous close of Rs. 57.01. Analysts have attributed this bearish trend to the overall decline in market indices, with the Sensex and Nifty falling by 0.25% and 0.31%, respectively.
However, Suzlon Energy is expected to capture the market's attention on April 1, 2025, following significant updates regarding its order book. The company reported an increase in its total orders despite facing some cancellations and truncations. As of March 28, 2025, the order book stood at 5,622 MW, up from 5,523 MW reported on January 28, 2025. This increase comes despite a cancellation of a 99 MW order from Vibrant Energy and a reduction of an order from O2 Power Private Limited, which was cut from 201.6 MW to 100.8 MW.
In addition to these adjustments, a customer also decided to cancel a 100.8 MW order for Suzlon’s 3 MW series wind turbines. Despite these setbacks, the energy company emphasized that it has secured new acquisitions that helped bolster its overall order book. The recent operational difficulties, primarily due to supply chain interruptions, have posed challenges for Suzlon, impacting the timing of ongoing projects.
In the third quarter of FY 2024-25, Suzlon Energy recorded impressive financial growth, with a 91% increase in net revenue, totaling Rs. 2,969 crores, compared to Rs. 1,553 crores in the same quarter the previous year. The net profit after tax also surged by 91%, reaching Rs. 388 crores. This positive financial performance has led many analysts to recommend buying shares in the company, with Trendlyne estimating an average target price of Rs. 63.67, indicating a potential upside of 12.37% from the last recorded price of Rs. 56.66.
Market analysts have expressed optimism regarding Suzlon's future, despite the recent cancellations. In a note dated March 24, 2025, Geojit Financial Services predicted that order inflows for Suzlon Energy would remain strong in the near term. They noted that while the company has faced execution challenges, such as transmission delays and land-related issues, the wind turbine generator (WTG) deliveries have been robust.
Geojit also forecasted a margin expansion of 70 basis points, anticipating improved profitability from the WTG segment due to a better project mix. The company's profit after tax (PAT) is expected to grow at a 30% compound annual growth rate (CAGR) from FY 2025 to FY 2027. Geojit values the stock at a multiple of 40 times the expected earnings per share for FY 2027, arriving at a target price of Rs. 71.
Another brokerage, MOFSL, suggested a target price of Rs. 70 on Suzlon Energy, reflecting a slight premium to the historical average two-year forward price-to-earnings (PE) ratio of 27 times. They believe that despite some fluctuations in valuations across the capital goods sector, the outlook remains positive due to healthy earnings growth trajectories, a solid order book, and improving cash flows.
Suzlon's recent updates highlight the dynamic nature of the renewable energy market, where order cancellations can significantly impact financial forecasts. The company has indicated that the cancellations could potentially lead to a financial impact of Rs. 1,800 crores, based on the average revenue of Rs. 6 crores per megawatt executed. This figure is derived from the 300 MW of orders that have been canceled, which includes the aforementioned orders from Vibrant Energy and the global utility firm.
As Suzlon navigates these challenges, its management remains focused on executing its existing orders. The company has delivered 977 MW of orders in the first nine months of FY 2025, with expectations to execute a total of 1,500 MW for the fiscal year. If they manage to meet this target, it would imply a delivery of 503 MW in the fourth quarter of FY 2025, potentially reducing the net order book to 5,119 MW.
In summary, while Suzlon Energy faces some immediate challenges with order cancellations and operational difficulties, its robust financial growth and positive market outlook suggest that the company is well-positioned for future success. Analysts remain optimistic about the company's ability to rebound and capitalize on the growing demand for renewable energy solutions.
