Suzlon shares up 6%, rise most in five months: Two factors behind the rally

Suzlon Energy shares rose the most in five months today after brokerage Motilal Oswal maintained its Buy rating with a price target of Rs 65. Another factor, which led to the rally in the stock amid a falling market today, was company co-founder Girish Tanti's statement that the Suzlon Group was investing around Rs 550 crore to set up three AI-powered blade factories to fast-track execution of its order book and meet the rising demand of the domestic wind industry.

Suzlon stock performance 

Suzlon Energy stock was among the top gainers on BSE today, rising 6.38% to Rs 39.98 in the current session. Market cap of the firm rose to Rs 54,847 crore. Despite today's rally, the stock still trades in the oversold zone with a RSI of 26.1. The scrip trades near the 52 week low of Rs 36.30 reached on October 8.

However, the stock was the best performer among its peers today. On the other hand, Sensex fell 600 pts to 71,876 today and Nifty slipped 154 pts to 22,365.

AI Powered blade factories 

While two blade facilities being planned for Gujarat and Karnataka, the third will come up in Tamil Nadu, Tanti told PTI. Suzlon already has five blade factories in Jaisalmer, Bhuj, Ratlam, Dhule and Anantapur.

With the addition of the three units, Suzlon will have India's largest smart wind manufacturing capacity with a total of 18 factories. When asked about investment in these new factories, Tanti said the company has earmarked capex of Rs 550 crore for the three projects, funded from internal accruals. Rs 200 crore is for the Tamil Nadu project; the remaining will be utilised for Gujarat and Karnataka facilities.

Suzlon Energy share 

On the other hand, MOFSL maintains a BUY rating on Suzlon Energy with a target price of Rs 65, valuing the stock at 30x FY28E EPS. The target valuation of 30 times FY28E earnings is slightly above Suzlon’s historical two-year forward P/E average of 27 times, said the brokerage.

The premium is supported by better earnings visibility, a strong order pipeline and favourable prospects for wind power capacity additions. Earnings are also expected to gather pace in the second half of FY27, which typically contributes 60-65% of the company’s annual EBITDA due to the seasonal nature of its business. Deliveries are projected to rise to 2.1 GW in the second half, compared with an estimated 1.2 GW in the first half.

About Suzlon Energy

Suzlon Energy is a provider of renewable energy solutions. The  company is a producer of wind turbines. It offers a range of solar energy solutions, such as solar irradiance assessment, land acquisition and approvals, infrastructure and power evacuation, supply chain, installation and commission and life cycle asset management.