Suzlon shares: JM Financial gives it a 'buy' despite execution bottlenecks; details here

Suzlon Energy has received a continued vote of confidence from JM Financial, which has maintained a buy rating and set a target price of Rs 70 per share, reflecting optimism about the company’s long-term prospects. The latest JM Financial report highlights Suzlon’s progress in manufacturing capacity and order book strength, following key discussions at Suzlon’s recent Manufacturing Day event.

The management outlined the critical role of wind energy in the renewable energy mix, stating, "the management emphasised that wind energy is essential for providing reliable and dispatchable renewable power. In contrast, solar combined with battery energy storage systems (BESS) can only meet peak demand for about 2 hours. Utilities with rich experience and a long-term outlook continue to prioritise wind energy capacity to maintain a balanced renewable energy portfolio," it said.

Suzlon has increased its manufacturing capacity from 3GW to 4.5GW and plans to add three new smart blade plants in Gujarat, Karnataka, and a location yet to be announced. The company’s robust order book stands at 6.2GW, with strong expectations for future orders arising from around 40GW of recently signed renewable power purchase agreements, most of which are hybrid projects including wind energy.

Shares of Suzlon Energy jumped nearly 2 per cent to Rs 51.75 on Tuesday, commanding a total market capitalization of more than Rs 72,000 crore. The stock had settled at Rs 51.79 on Monday. 

Competitors in the wind turbine market, such as Envision, Adani, and Senvion, have launched 4MW and 5MW wind turbine generators (WTGs). However, Suzlon’s management highlighted, "the management stated that the levelised cost of energy (LCoE) is more important than turbine size. Given the wind conditions in India, 3MW WTGs are suitable for most sites." The company is developing higher-capacity turbines, with launches planned when infrastructure, design, and reliability criteria are met.

According to JM Financial, Western original equipment manufacturers (OEMs) such as Siemens Gamesa, Vestas, and GE have encountered quality and reliability issues in their push for larger wind turbines, resulting in costly rework and financial losses. In contrast, Suzlon’s approach emphasises reliability and cost-efficiency for India’s specific wind conditions.

Suzlon is also pressing ahead with expansion into service businesses for non-Suzlon turbines, pursuing export markets, and providing renewable energy variability management solutions. JM Financial notes that execution bottlenecks, such as connectivity and land availability, may limit industry growth to 7-8GW annual installations, but Suzlon is targeting execution of 2.5GW, 3.1GW, and 3.5GW in FY26, FY27, and FY28, respectively.