Despite the downgrade, Morgan Stanley has raised its price target for Suzlon to Rs 88 per share, up from Rs 73. This revised target indicates a potential upside of 8% from Thursday’s closing price of Rs 81.8.
Over the past six months, Suzlon’s shares have doubled in value, rising 112% and outperforming the Sensex index by 95 percentage points. This outperformance has been driven by a significant increase in the order book and improvements in the company’s balance sheet, along with strong cash flows from operations. Suzlon’s order book is now at an all-time high, nearing 5 GW.
Morgan Stanley maintains that Suzlon continues to be a key beneficiary of India’s wind energy growth amid favorable competition and has the potential to increase its market share to between 35% and 40%.
Ordering activity in the renewable energy sector remains robust, with Morgan Stanley expecting 32 GW of new orders from financial year 2025 to 2030.
“Suzlon has been prudent in managing its orders, as reflected in its high share of commercial and industrial (C&I) customers and the large order from NTPC. However, it cannot be completely insulated from execution risks, which may be system-related or client-specific,” Morgan Stanley stated in its note.The recent acquisition of Renom by Suzlon provides an entry into the multi-brand operations and maintenance (O&M) business, and Morgan Stanley is awaiting customer sign-ups in this sector, which could further enhance Suzlon’s earnings growth.However, following this recent price surge, Morgan Stanley sees Suzlon’s risk-reward profile as more balanced and is now looking for stronger execution relative to its baseline expectations before becoming more optimistic on the stock again.
As of 11:14 AM, Suzlon Energy shares were trading 0.12% lower at Rs 81.7 on the BSE, after falling to a day’s low of Rs 80.52 in early trade.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
Source link
