Suzlon Energy cuts operating margin guidance to 15%

MUMBAI: Wind energy major Suzlon Energy has cut its FY27 operating margin guidance to 15%, down from its earlier projection of 17%, as an unfavourable project mix, rising commodity costs, and foreign exchange volatility put pressure on profitability.

Its earnings before interest, tax, depreciation and amortization (Ebitda) margin stood at 15.1% in the first half of FY27. Management expects margins to improve as non-recurring operating expenses taper off and business volumes increase following the monsoon season.

"The order book, even after high execution, remains at a healthy 6 GW, which is almost a year and a half of order book in hand. India is a great market growing from 8GW to 13GW in the next couple of years," Ajay Kapur, CEO, Suzlon Group, told ET.


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The wind turbine maker is counting on a sharp pick-up in deliveries in the second half of the fiscal year to improve operating leverage, while gearing up to enter overseas markets with its next-generation turbines.

The company estimates that non-recurring operating expenses have affected margins by about one percentage point, while foreign exchange movements and commodity-related pressures linked to geopolitical tensions have had an estimated 0.5 percentage point impact.

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Suzlon Energy reported a 1.3% year-on-year increase in consolidated net profit to Rs 394 crore for the September quarter of FY27. Net profit in the year-ago quarter stood at Rs 389 crore, excluding a deferred tax benefit of Rs 891 crore that had taken reported profit to Rs 1,279 crore.

Changes in the mix of customers and projects have also weighed on its performance. The company expects the impact of non-recurring expenses to taper in the third and fourth quarters. A reduction in commodity price pressures could provide further upside to margins, Kapur added.

Geopolitical tensions, including the possibility of further conflict in the Middle East, could increase input costs.

However, Suzlon believes its predominantly domestic supply chain offers some insulation compared with manufacturers that rely more heavily on imports.