Suzlon Energy: Nuvama shares revised target price after robust guidance

Suzlon Energy Ltd shares are in focus on Friday morning after the renewable energy solutions provider reported a 364 per cent year-on-year (YoY) jump in March quarter profit on 73.20 per cent surge in sales. Following the results, Nuvama Institutional Equities tweaked its FY26–27 estimates for Suzlon Energy to factor in 5–7 per cent higher sales, 8-15 per cent better Ebitda and making tax adjustments. 

"We remain long-term positive on Suzlon Energy; Retain ‘HOLD’ with a target price of Rs 68 from Rs 61) at 40 times (from 35 times) FY27E (WTG + F&F EPS) plus DCF of O&M segement," Nuvama said. 

The Suzlon Energy stock closed at Rs 65.44 on Thursday, up 16 per cent in the past one month and 44 per cent in the past one year.

Suzlon Energy reported a consolidated net profit of Rs 1,181 crore in Q4 compared with Rs 254 crore in the same quarter last year. This was boosted by a deferred tax gain of Rs 600 crore. Sales for the quarter soared to Rs 3,773.50 crore from Rs 2,179.20 crore. 

Suzlon Energy's delivered execution of 573MW in Q4FY25 was against an estimate of  475MW. Its operating profit margin (OPM) improved to 18.3 per cent against estimate 14.7 per cent on higher WTG mix-led operating leverage. This drove a 25 per cent beat to Nuvama's PBT estimates despite elevated depreciation and interest costs due to Renom acquisition. 

"However, deferred tax asset creation (Rs 640 crore) drove 2.7 times PAT beat; this DTA effectively advances benefit of lower tax incidence to FY25 instead of FY26 with limited impact on FY27 estimates," Nuvama said.

Nuvama said Suzlon Energy's order inflow in Q4FY25 was less than 100MW due to truncation and cancellation of certain orders leading to an order book of 5GW (execution over 24 months) at end-FY25, lending revenue visibility. 

"We reckon Suzlon Energy shall remain a key beneficiary of the rising mix of FDRE/RTC/Hybrid in GoI tenders. Suzlon also remains a key player in C&I (55 per cent of OB) and PSU segment, and benefits from a duopolistic market in EPC+WTG capabilities and maintains an overall market share of ~30 per cent-plus," it said.