Buy Suzlon Energy shares, says Anand Rathi as it reinitiates coverage

Anand Rathi has re-initiated coverage on Suzlon Energy, issuing a Buy rating with a target price of Rs 81 per share. The recommendation came as the company exhibited a strong financial turnaround, trading at 40 times its FY27 estimated earnings per share (EPS) of Rs 2.04.

Suzlon Energy, a leader in India's wind energy sector with 15.1GW of installed capacity, is benefiting from a robust order book and favourable government policies. The company is poised to capitalise on India's target of achieving 10GW in annual wind additions by 2030. This ambitious goal is supported by policies such as Renewable Purchase Obligations (RPO) and the development of hybrid energy systems, which enhance the sector's growth potential.

Despite past challenges such as subdued demand and stretched balance sheets, Suzlon Energy has witnessed a significant financial rebound, Anand Rathi said. This recovery is further bolstered by ambitious government targets, which contribute to a projected earnings before tax compound annual growth rate (CAGR) of 53 per cent over FY25–27. However, Suzlon's entry into the tax net will see profit after tax growth tempering to 15.8 per cent.

Suzlon Energy is also set to expand its manufacturing capacity from 4.5GW to 5.5GW, improving its readiness to meet rising demand. This strategic positioning is expected to increase Suzlon's market share through innovation in turbine capacity, Anand Rathi said.

Further financial strength is projected from the generation of approximately Rs 6,000 crore in operating cash over the next two years. This sustained growth is likely to maintain the stock's premium valuation compared to its historical average, the domestic brokerage said 

Anand Rathi sees potential adverse changes in government policies, slower deliveries, and low promoter holding as key risks. Nonetheless, the market dynamics remain in Suzlon's favour due to increasing renewable energy focus and grid stability improvements, it said.

Suzlon's return to profitability and strong market presence are anticipated to yield sustained earnings momentum over the next five years, particularly supported by demand from corporate and public sector units. The company's expected deliveries of 2.5GW in FY26 and 3.2GW in FY27 align with its strategic growth plans, which aim to reinforce its leadership in the renewable energy sector.

Overall, Anand Rathi's optimism for Suzlon Energy stems from both its internal restructuring and external support from government initiatives, positing Suzlon as a key player in the renewable energy space.