This Suzlon Energy peer stock has 32% upside potential; details here

Systematix Institutional Equities, which recently hosted the Inox Wind Ltd management to better understand the key developments in India’s wind energy sector, has retained its 'Buy' rating on the Suzlon Energy peer stock, with a price target of Rs 724 per share. Systematix's target suggests a 32 per cent potential upside over Inox Wind's prevailing trading price of Rs 546.40.  

The key takeaway from the meeting, Systematix Institutional Equities said, was: Execution is expected to be in the 800MW-1,200MW range for FY25 and FY26.  Inox Wind is positioned to deliver strong free cash flows and that it is making continued deleveraging efforts that render the company cash positive within a few months, Systematix noted.

Inox Wind noted that it has completely transitioned to 3MW platform and ceased production of 2MW WTGs, which would enable it to deliver on targeted execution as well as be a key profitability driver.

The wind energy space in India is expected to become a 5GW-8GW market in FY25/FY26. Inox Wind expects reverse auction re-introduction is a no event and does not impact Inox Wind in any way.

"The company has seen a turnaround in its financial position this year. In 1QFY24 Inox Wind turned EBITDA positive, followed by being cash PAT positive in 2QFY24, and began generating profits in 3QFY24.

Last month, Anand Rathi initiated coverage on both Inox Wind and Suzlon Energy with 'Buy' ratings, as it was optimistic over a renewed focus on the wind-energy sector amid ambitious growth plans by the government

"After a long lull since FY17, order books of Suzlon Energy and Inox Wind have jumped, which provide earnings assurance, the brokerage said adding that the competitive intensity for the sector has come down as players have exited the space, leaving only two to capture the market," the brokerage said in a March note.

Anand Rathi suggested a target price of Rs 590 on Inox Wind.

"Fully integrated in wind energy, Inox Wind is set to benefit from the upturn in the sector, Anand Rathi said. After a turbulent FY18-23, promoters’ fund infusion has cut interest-bearing debt to Rs 500 crore in Q3FY24. Ahead, aided by a strong, 2,600MW order book, Anand Rathi expects 450MW/700MW/1,000MW delivery in FY24/25/26. The landbank may support 5GW of capacity, which would ensure faster turnaround of turnkey projects (1.8GW out of 2.6GW)," it said.