Recommendation from Capital Goods Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon.

Suzlon Energy : ALL-TIME HIGH ORDER BOOK AT ATTRACTIVE VALUATION

HERE IS WHY
✓ Strong Government policy support
✓ Highest ever order book exceeding 5.5 GW
✓ Attractive valuation relative to the industry

I ndia’s wind energy sector is poised for significant expansion, driven by ambitious national targets and robust domestic demand. The country plans to scale total power capacity from 475 GW to 2,100 GW by 2047, with wind contributing 400 GW (19 per cent), up sharply from the current 50 GW (as of March 2025).

Key growth drivers include India’s USD 10 trillion economy vision by 2032, energy demand growing at a 7 per cent CAGR, and a strong wind bidding pipeline of over 39 GW. India has substantial onshore wind potential 695 GW at 120m hub height and 1,164 GW at 150m alongside 25.4 GW of repowering opportunity. Policy support is robust, with the Green Hydrogen Mission (requiring 125 GW by 2030), a `7,500 crore VGF scheme for offshore wind, and an upcoming carbon market by 2026.

Suzlon Energy Ltd., a leading renewable energy provider, leverages its vertically integrated model to design, manufacture, and supply critical wind components in-house, ensuring quality and efficiency. It offers end-to-end solutions from wind assessment to execution and manages over 15 GW through its O&M services, securing recurring revenue. With over two decades of experience and a market share exceeding 30 per cent, Suzlon is well-positioned to lead India’s wind energy transition.

The company is gaining strong traction, supported by regulatory tailwinds such as the draft Revised List of Models and Manufacturers (RLMM) notification mandating domestic sourcing, where Suzlon is fully compliant. Its record-high order book of over 5.5 GW, including 1.5 GW from NTPC, and rapid execution of 1,550 MW in FY25 underline its operational strength.

Management has guided for 60 per cent growth across key metrics in FY26 revenue, EBITDA, deliveries, and PAT driven by strong sector demand and improved execution. Wind sector commissioning is expected to hit 6-9 GW annually, backed by India’s 100 GW target (vs 51 GW installed). With 20 GW OEM capacity and localised supply chains, Suzlon is well-positioned to compete effectively with global peers.

In Q4 FY25, Suzlon reported a strong financial performance with consolidated revenue rising 73 per cent YoY to `3,774 crore. EBITDA grew 95 per cent YoY to `693 crore, while the EBITDA margin expanded 200 basis points to 18.4 per cent, driven by scale efficiencies and improved execution. Meanwhile, contribution margin moderated slightly to 32.1 per cent from 33.6 per cent in Q4 FY24. Net profit after tax surged to `1,181 crore, compared to `254 crore in the year-ago quarter, aided by the recognition of a `600 crore deferred tax asset. Net volumes more than doubled to 573 MW, up from 273 MW in Q4 FY24, highlighting strong commissioning momentum.

Suzlon Energy Ltd. trades at a Price to Earnings (P/E) ratio of 41.2x, which is attractively valued compared to the industry average of 53.6x. The company boasts a strong Return on Capital Employed (ROCE) of 32.4 per cent and a robust Return on Equity (ROE) of 41.3 per cent. Backed by a solid balance sheet and a three-year sales and profit CAGR of 18.3 per cent and 223 per cent respectively, Suzlon’s financial trajectory is on a clear upward trend. Given the positive industry outlook, robust order book, and strong operational performance, we recommend a BUY on Suzlon.