Suzlon surges 4.4% as Nomura sees 30% potential upside

MUMBAI: Shares of Suzlon Energy rose 4.4% to Rs 27.60 on Monday after Nomura initiated coverage on the company with a buy rating. The brokerage has set a target of Rs 36 for the stock—about 30% above Monday’s price — citing a potential turnaround.

Till early 2015, Suzlon was out of investors’ favour because of mounting debt problems and product quality issues.

But, the entry of Sun Pharma’s billionaire promoter Dilip Shanghvi into the company as a key stakeholder and the company’s efforts to sell some businesses to cut debt has rekindled investor interest in the stock.

“After the financial restructuring and Senvion sell-off, Suzlon is now an India pure play set to refocus on new order wins and execution, and well placed to win back 50% market share in the domestic wind equipment market,” said Nomura’s analyst Amar Kedia in a client note.

The government’s ambitious target to generate wind energy of 60 gigawatts by 2022 is expected to drive demand for wind equipment, the brokerage said. Various estimates show 1 gigawatt can power atleast 7 lakh homes.