Market leader stock with 3-year net profit CAGR of over 85% to add to your watchlist

India’s heavy electrical equipment sector is a cornerstone of its industrial landscape, achieving a market size of Rs 51 lakh crore in FY 2022-23. The industry experienced a 13 percent growth during this period, with exports reaching Rs 94,170 crore. Projections indicate the sector will double to $130 billion by 2030, driven by robust domestic demand and increasing global competitiveness. 

Price movement 

With a market capitalization of Rs 75,748.55 crore, the shares of Suzlon Energy Ltd closed at Rs 55.07 per share, increasing around 5.64 percent as compared to the previous closing price of Rs 52.13 apiece. 

Matter explanation 

The company’s consolidated net profit numbers have showcased an increase from Rs 104 crores during FY2020-21 to Rs 660 crores in FY23-24. The company has a net profit CAGR for 3 years of 85.14 Percent. 

Brokerage recommendations 

Recently, Investec, one of the well-known brokerages globally, gave a ‘Buy’ call on the Wind energy stock with a target price of Rs 70 apiece, indicating a potential upside of 27 percent from Friday’s price of Rs 55 per share. 

Brokerage Rational 

Investec sees Suzlons well-positioned for wind energy revival, backed by a net-cash status, strong return ratios, and a 5.5 GW order book. With an optimized supply chain and solid bid pipeline, revenue and PAT are projected to grow at 55 percent and 66 percent CAGR, respectively, through FY24- FY27, boosting RoE to 32 percent. 

Also read: IT stock jumps over 4% after receiving contract worth over ₹18 Cr from Punjab Govt

Recent Order 

According to the company filing, Suzlon Energy Ltd secured a 201.6 MW repeat order from Oyster Renewable, expanding their partnership to 283.5 MW in Madhya Pradesh, which is to be completed within nine months. This strengthens the state’s renewable energy infrastructure and reinforces Suzlon’s leadership in India’s clean energy transition. 

The order to be executed in Madhya Pradesh includes 64 advanced S144 wind turbine generators (WTGs) with Hybrid Lattice Towers (HLT), each rated at 3.15 MW. It also highlights the rising demand for wind energy among Commercial & Industrial (C&I) consumers, who now contribute 59 percent of Suzlon’s total order book. 

Manufacturing Capacity 

The company expanded its manufacturing capacity to over 4.5 GW with upgraded facilities in Pondicherry and new blade lines in Madhya Pradesh and Rajasthan. Its S144 model has a strong 5 GW order book, with 85 percent of components sourced domestically under the “Made in India” initiative. 

Execution and Deliveries 

The company achieved a record 447 MW delivery in Q3, a 163 percent YoY rise from 170 MW. With 977 MW delivered in nine months, it surpassed FY24’s 710 MW total. Industry-wide, 2,277 MW was commissioned, though transmission delays and land issues impacted progress. 

Operational Highlights 

The company’s 80 percent order book consists of non-EPC orders, focusing on those with partial land availability for better commissioning. Key orders from NTPC, Jindal Renewables, and Torrent Power have substantial land availability for FY26. The O&M business manages 15 GW in India with 96 percent+ machine availability. 

Strategic Initiatives 

Suzlon, a UN Global Compact member, aligns with the Net Zero by 2050 goal. It plans to diversify within WTG through advanced project development contracts totaling 1,100 MW and is exploring export opportunities based on domestic market saturation and capacity utilization. 

Market leader 

Suzlon Energy Ltd has a market leader position with a 31 percent market share as per the latest filing, the company has 20.8 GW global installed wind energy capacity. 

Margin Guidance 

The company expects consolidated contribution margins to stabilize around 20 percent, adjusting for steel prices and project execution. O&M margins should remain near 40 percent, though quarterly fluctuations may occur due to one-off items. 

Company profile 

Suzlon Energy Limited is an Indian renewable energy solutions supplier. The company manufactures wind turbine generators and related components in various capacities. It operates in 17 countries including Asia, Australia, Europe, Africa, and the Americas. 

Written by Abhishek Singh

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