Suzlon Energy: A Market Leader with an 85% Net Profit CAGR—Should You Add It to Your Watchlist?
Suzlon Energy : India’s heavy electrical equipment sector is a vital part of its industrial ecosystem, boasting a market size of ₹51 lakh crore in FY 2022-23. With a 13% growth rate and exports touching ₹94,170 crore, this sector is poised for massive expansion, potentially reaching $130 billion by 2030. One company riding this wave of growth is Suzlon Energy Ltd, a leader in the wind energy segment.
With a remarkable three-year net profit CAGR of 85.14%, Suzlon has attracted strong interest from investors and analysts alike. Let’s dive into the company’s performance, future growth potential, and whether it deserves a spot on your watchlist.
Price Movement & Market Position
Suzlon Energy Ltd, with a market capitalization of ₹75,748.55 crore, has seen steady growth in its share price. The stock recently closed at ₹55.07 per share, marking a 5.64% increase from its previous close of ₹52.13. The stock’s upward trajectory signals growing investor confidence in Suzlon’s long-term potential.
Stellar Financial Performance
Suzlon’s consolidated net profit has seen a massive surge from ₹104 crore in FY2020-21 to ₹660 crore in FY2023-24. This translates to a three-year net profit CAGR of 85.14%, highlighting the company’s strong growth trajectory.
Brokerage Recommendations & Growth Potential
Global brokerage firm Investec recently initiated a ‘Buy’ call on Suzlon Energy, setting a target price of ₹70 per share. This suggests a 27% upside from its current price of ₹55.
Why is Investec Bullish on Suzlon?
- Net-Cash Status: Suzlon has significantly improved its financial health.
- Strong Return Ratios: The company’s improving profitability makes it attractive for long-term investors.
- Robust Order Book: Suzlon holds a 5.5 GW order book, ensuring revenue visibility for the coming years.
- Revenue & Profit Growth: Revenue and PAT are expected to grow at 55% and 66% CAGR, respectively, from FY24 to FY27.
- Rising Return on Equity (RoE): Expected to touch 32%, making Suzlon a highly profitable company.
Recent Orders & Execution Strength
Suzlon continues to strengthen its market leadership with major new orders. Recently, the company secured a 201.6 MW repeat order from Oyster Renewable, bringing their total collaboration to 283.5 MW in Madhya Pradesh. The project, set to be completed within nine months, reinforces Suzlon’s role in India’s renewable energy push.
This order includes 64 advanced S144 wind turbine generators (WTGs) with Hybrid Lattice Towers (HLT), each rated at 3.15 MW. Notably, 59% of Suzlon’s total order book now comes from commercial & industrial (C&I) consumers, highlighting increasing demand from private sector players.
Manufacturing & Expansion Strategy
To meet the rising demand, Suzlon has expanded its manufacturing footprint:
- 4.5 GW capacity with upgraded facilities in Pondicherry.
- New blade manufacturing lines in Madhya Pradesh & Rajasthan.
- 85% of components sourced domestically, aligning with India’s “Make in India” initiative.
Execution & Deliveries – Strong Operational Performance
Suzlon achieved record-breaking 447 MW of deliveries in Q3, marking a 163% YoY increase from 170 MW.
- Total deliveries in nine months: 977 MW, already surpassing FY24’s 710 MW total.
- The industry-wide commissioning of 2,277 MW shows Suzlon’s growing market share, despite transmission and land challenges.
Operational & Strategic Highlights
- Order Book Composition: 80% non-EPC orders, prioritizing projects with partial land availability for quicker commissioning.
- Key Clients: NTPC, Jindal Renewables, and Torrent Power have strong land banks, ensuring project execution.
- O&M Business Strength: Managing 15 GW of wind energy assets in India with 96%+ machine availability.
Sustainability & Strategic Initiatives
As a UN Global Compact member, Suzlon aligns with global Net Zero by 2050 goals. Key initiatives include:
- 1,100 MW in advanced project development contracts.
- Exploring exports to leverage existing capacity and global market demand.
Market Leadership & Competitive Edge
Suzlon holds a dominant 31% market share in India’s wind energy sector. With a global installed wind capacity of 20.8 GW, it is well-positioned for long-term growth.
Financial Ratios & Performance Overview
| Metric | Value |
|---|---|
| Market Cap | ₹75,748.55 crore |
| Current Stock Price | ₹55.07 |
| Net Profit (FY23-24) | ₹660 crore |
| 3-Year Net Profit CAGR | 85.14% |
| Order Book | 5.5 GW |
| Revenue CAGR (FY24-27) | 55% |
| PAT CAGR (FY24-27) | 66% |
| Return on Equity (RoE) | 32% |
| Manufacturing Capacity | 4.5 GW |
Margin Guidance & Future Outlook
- Contribution Margins: Expected to stabilize around 20%, adjusting for steel prices and project execution.
- O&M Margins: Expected to remain close to 40%, though some fluctuations may occur.
Final Thoughts – Should You Add Suzlon to Your Watchlist?
Suzlon Energy Ltd stands out as a market leader in wind energy, backed by strong financials, strategic expansions, and a robust order pipeline. The company’s remarkable 85% net profit CAGR, improving margins, and bullish brokerage ratings make it an attractive stock for long-term investors.
With India’s renewable energy sector booming and Suzlon expanding aggressively, the stock has the potential for significant upside in the coming years. Investors looking for a high-growth clean energy stock should keep a close eye on Suzlon.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.