Suzlon Energy bull expects stock to rally 54% from current levels on better risk-reward

Suzlon Energy Ltd.'s shares have the potential to rise up to 54% from current levels, brokerage firm Motilal Oswal wrote in its note on Tuesday, January 20.

The brokerage maintained its "buy" recommendation on the stock with a price target of ₹74, which indicates an upside potential of 54% from current levels.

Motilal Oswal wrote in its note that Suzlon Energy's shares have been under pressure recently as investors have been concerned about the cannibalization of wind's shares in tenders from the solar segment, a slow pace of wind installation, and a rising competitive intensity in the wind segment.

Data centers, Commercial & Industrial (C&I) consumers and PSUs could together drive incremental wind demand of 20-24 GW by 2030, over and above the India's targeted 100 GW capacity by financial year 2030, according to Motilal Oswal.

Suzlon Energy's strategy to scale up its EPC share to 50% of its order book gives the company a meaningful competitive advantage. "The company's superior execution track record Vs domestic peers, coupled with limited participation of Chinese OEMs in the EPC space, positions Suzlon Energy favourably to capture complex and large-scale projects," Motilal Oswal's note said.

Out of the 40 GW projects with pending Price Purchase Agreements (PPAs), industry channel checks suggest that nearly 17 GW are pure solar, with wind accounting for negligible share. The management also sees exports emerging as an additional growth driver with orders expected in early financial year 2027 and supplies starting from financial year 2028.

At the current price, the concerns regarding Suzlon Energy appear to be priced in and the risk-reward is favourable, Motilal's note stated.

Suzlon Energy is a "consensus buy" among analysts as all nine of them have a "buy" rating on the stock.

“In the next two years, we should cross the 10-gigawatt mark,” Suzlon Group's Executive Vice Chairman Girish Tanti said in an exclusive chat with CNBC-TV18 on the sidelines of the World Economic Forum in Davos.

Looking further ahead, he added that capacity could rise to about 13 to 15 gigawatts by 2030, supported by annual manufacturing capacity of nearly 20 gigawatts and export demand.

Shares of Suzlon Energy ended 1% lower on Monday at ₹47.94. The stock is down 37% from its 52-week high of ₹74.47, which also happens to be Motilal Oswal's price target.