JM Financial cuts Suzlon Energy’s target price to Rs 71, cites execution challenges

JM Financial has revised its target price for Suzlon Energy, lowering it to Rs 71 from Rs 80, while maintaining a ‘Buy’ rating. The brokerage cited execution challenges and a moderation in the P/E multiple from 40x Dec’26 to 35x Mar’27 as key reasons for the downgrade.

Despite the target price cut, JM Financial sees a potential 29% upside from the previous day's closing price of Rs 55.

Suzlon’s order book stands at 5.9GW, its highest ever, reflecting strong industry demand. However, execution challenges, particularly land availability and Right of Way (RoW) issues, remain a concern.


JM Financial stated, "The order book stands at 5.9GW, but execution remains a key concern, particularly regarding land availability with clear Right of Way (RoW)."

Suzlon is actively working to expand its manufacturing capabilities to meet rising demand. The brokerage noted, "The manufacturing capacity of the company will increase from 3.15GW to 4.5GW, taking together capacities at both Daman and Pondicherry plants."

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During a recent visit to Suzlon’s Daman plant, JM Financial observed infrastructure upgrades aimed at handling larger wind turbine generators (WTGs). "The area of the shop floor is under expansion by converting the existing warehouse into the new hub assembly shop. The capacities of EOT cranes in both shops and loading area have been increased," it noted.

The enhancements include an 80-ton electric overhead traveling (EOT) crane for 4MW WTGs, set to be operational by April-May 2025, increasing assembly stations from 8 to 12 and raising capacity from 2.8GW to 3.5GW. Additionally, the nacelle area's crane capacity has been upgraded from 80 tons to 110 tons, and the FG yard crane is being enhanced to handle up to 150 tons.

Suzlon remains one of the most vertically integrated wind turbine manufacturers, with in-house capabilities across 13 factories producing key components like gearboxes, blades, and control panels.

The company is expanding capacity at Daman and restarting its Pondicherry plant to push its rated manufacturing capacity beyond 4.5GW annually.

JM Financial observed, "Suzlon is among the most vertically integrated wind turbine makers in the industry with in-house manufacturing capabilities spread across 13 factories for all key components of a wind turbine generator (WTG) such as blades, nacelles, control panels, hubs, and tubular towers."

The company has been a dominant player in the Indian wind energy market, securing 75-80% of recent WTG orders alongside Envision China. "Around 12-14GW of WTG orders have been placed in India in recent years with Suzlon and Envision China bagging 75-80% of the share," JM Financial noted.

Among Suzlon’s major ongoing projects is the execution of a 1,166MW wind turbine order from NTPC Green Energy Ltd. (NGEL), covering 370 sites. The brokerage pointed out, "The company received India's largest wind turbine order of 1,166MW, located at 370 sites, from NTPC Green Energy Ltd. (NGEL) in Sep’24. Currently, the order is under execution."

Despite these strengths, JM Financial cautioned that long-term growth may face hurdles unless execution challenges are effectively addressed. "We maintain our BUY rating on the stock with a TP of INR 71 (from INR 80 earlier), moderating P/E multiple from 40x Dec’26 to 35x Mar’27 given execution challenges constraining growth beyond FY27 and roll forwarding our EPS from Dec’26 to Mar’27."

At 11:13 am, Suzlon Energy stock was trading 3% higher at Rs 56.6 on the BSE.

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