Motilal Oswal has given a “Buy” rating and sees an upside potential of 24% from Thursday’s closing price on the BSE.
“SUEL stands to benefit from regulatory tailwinds mandating local content, a robust order book providing strong revenue visibility, and execution improvements through proactive land acquisition and EPC expansion initiatives,” the brokerage said in a note.
The Revised List of Models and Manufacturers (RLMM) notification mandating local content in wind turbines is expected to be formally adopted in Q2FY26. While developers have sought up to a year for implementation, policy intent remains firm.
Motilal Oswal believes this could be a tailwind for Suzlon Energy.
Additionally, the company’s order outlook remains strong, with potential NTPC awards of 1.5 GW expected soon. FY26 total orders are estimated at 4 GW, which could raise the order book to 6.5 GW — surpassing the previous peak of 5.6 GW.However, the brokerage flagged execution as a continuing challenge in the wind sector, with FY25 capacity additions at 4.2 GW, still below the 5.5 GW peak in FY17. That said, larger turbine sizes and the expansion of projects across more states could help exceed past records.OEMs are playing a more active EPC role as their financials improve, with early land acquisition becoming more common. The shift to a land lease model and the phasing out of ISTS waivers should also ease execution bottlenecks. For Suzlon, the EPC share in the order book is expected to rise from 20% to 50% in the medium term, enhancing execution visibility.
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Suzlon’s cash conversion cycle (CCC) is also projected to improve by 30–35 days over the next few years, aiding free cash flow generation. This improvement will be driven by slower growth, better inventory control from rising EPC share, and stronger supplier bargaining power.
From 2HFY27 onwards, the company may also use more debt to meet working capital needs, improving balance sheet efficiency and sustaining return on equity (RoE).
Given this outlook, Motilal Oswal has applied a target P/E of 35x to FY27E EPS — a slight premium to its historical two-year forward P/E average of 27x — as execution and earnings momentum are only beginning to pick up for Suzlon Energy.
As of noon today, shares of Suzlon Energy were trading 0.7% lower at Rs 65.51 on BSE.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
