Suzlon 2.0: Strategy centered around four pillars and FY31 targets

Renewable energy firm Suzlon Energy has received a thumbs up from brokerage Systematix Institutional Equities post the company's analyst meet. While maintaining its buy call, the brokerage assigned a 29% upside to the multibagger stock with a price target of Rs 71.  In reaction, Suzlon Energy shares rose 3% to Rs 56.75 in early deals today. Market cap of Suzlon stood at Rs 76,822 crore. Total 52.89 lakh shares of the firm changed hands amounting to a turnover of Rs 29.76 crore.

Suzlon Energy shares have a beta of 1.35, indicating high volatility in a year. The green energy stock is trading higher than the 10 day, 20 day, 30 day, 50 day, 10 day, 100 day, 150 day and 200 day moving averages.

Suzlon 2.0 Strategy is centered around four pillars. The strategy focuses on the firm becoming a full stack RE solutions provider, with technological advancements, along with growth and market share capture targets by FY31. 

The management of the firm is bullish on the structural upcycle in global electricity demand, which is expected to nearly double by 2050. 

With this structural tailwind in place, Suzlon Energy’s strategy is centered on 4 pillars: 1) dispatchability as the key value driver, 2) faster execution, 3) supportive policies for domestic manufacturers like the approved list of models and manufacturers (ALMM) framework, and 4) export opportunities. 

Suzlon is targeting 25% consolidated revenue CAGR over FY31 and to take DevCo’s market share to 60% by FY31. 

In early June, the company said it would foray into businesses including battery storage and also start an integrated co-development platform converting renewable potential into execution-ready sites at scale which it has christened as 'RE DevCo'. 

The company also aims to raise its share in India’s wind OEM market to 40% by FY31, alongside targeting an export orderbook of over 3GW by FY31. 

Suzlon projected a five-year growth plan with 2.7 times growth in renewable energy (RE) orderbook from 5.5GW to 15GW, 4 times growth in RE sales from 2.5GW to 10GW, and 3.9x growth in RE assets under management (AUM) from 18GW to 70GW. 

The brokerage said it would remain positive on Suzlon Energy on the company’s long term strategy to resolve execution bottlenecks, increasing strategic focus on integrated full stack RE solutions, and entry into global markets. 

RE DevCo end-to end site control projects, supported by 25GW development pipeline is expected to strengthen execution control while addressing key industry challenges. 

"We expect SUEL to deliver 21%/28%/34% revenue/EBITDA/PBT CAGR over FY26-FY28E. We currently have a BUY rating on the stock with a TP of Rs 71/share based on 30x FY28E P/E," said Systematix. 

About Suzlon Energy

The Suzlon Group is a leading global renewable energy solutions provider, with ~21.5 GW of wind energy capacity installed across 17 countries. Headquartered at Suzlon One Earth in Pune, India, the Group includes Suzlon Energy Limited and its subsidiaries. A vertically integrated organisation, Suzlon has in-house R&D centres in Germany, the Netherlands, Denmark, and India, and world-class manufacturing facilities across India.