Suzlon Energy delivery strength offsets margin pressure as S175 and DevCo expand growth avenues

Investment View and Valuation

In its July 29, 2026 result update, Anand Rathi Research maintained its BUY rating on Suzlon Energy while reducing its target price to Rs 56 from Rs 60. With the stock’s CMP at Rs 48, the broker sees Suzlon as positioned to benefit from the improving domestic wind opportunity, supported by a healthy order book, execution visibility and a widening product portfolio.

Anand Rathi values Suzlon at 15 times FY28E EBITDA and considers the valuation, after the recent share-price correction, to offer better risk-reward given the company’s market position, execution pipeline and industry tailwinds.

Q1 FY27 Financial Performance

Suzlon delivered 506 MW of wind turbine generators in Q1 FY27, up 14 per cent year on year and ahead of Anand Rathi’s 484 MW estimate. Higher realisation of Rs 62.7 million per MW, up 11.7 per cent year on year, helped consolidated revenue rise 22.3 per cent year on year to Rs 38.3 billion, above the broker’s Rs 35.5 billion estimate and close to consensus of Rs 38.5 billion.

However, EBITDA declined 0.6 per cent year on year to Rs 5.9 billion, versus Anand Rathi’s Rs 6.7 billion estimate and consensus of Rs 6.3 billion. Adjusted PAT fell 15.2 per cent to Rs 3.9 billion, below the broker’s Rs 4.9 billion estimate and consensus of Rs 4.1 billion.

Margin Pressure and Cost Absorption

The profitability shortfall reflected a richer EPC mix, which increased to 32 per cent of scope from 22 per cent in Q1 FY26, geopolitical logistics disruption affecting an estimated 10-20 per cent of deliveries, lower fixed-cost absorption and incremental Suzlon 2.0 costs of about Rs 500 million in the quarter.

Wind turbine generator and renewable-solutions revenue rose 27.2 per cent year on year to Rs 31.7 billion, but segment EBIT margin fell 524 basis points to 8.3 per cent. Management expects higher delivery volume in H2 FY27 to absorb these costs and maintained its FY27 EBITDA-margin guidance of 17-18 per cent, with a 50-100 basis point deviation.

Order Book and Execution Visibility

The order book stood at 5,933 MW at Q1 FY27 and increased to 6,135 MW by July 2026, supported by around 1 GW of FY27 year-to-date inflows. The mix comprised 88 per cent S144, 10 per cent S120 and 2 per cent of the newly unveiled 5 MW S175 platform.

Around 84 per cent of the order book is from PSU and commercial and industrial customers, which management expects to support cash conversion. Installations increased about 2.3 times year on year to 269 MW, while over 1.2 GW of erected turbines awaited commissioning.

Segment Performance

RE AMS

The RE AMS operation remained a stable, high-margin annuity business. Revenue grew 8.1 per cent year on year to Rs 6.3 billion as the managed fleet reached 16.1 GW, while EBIT margin expanded 450 basis points to 33.6 per cent.

Management said Q1 AMS EBITDA margin of about 43 per cent reflected timing factors and expects a sustainable range of 38-40 per cent, supported by machine availability above 95 per cent.

Foundry and Forging

Foundry and forging revenue declined 14.1 per cent year on year to Rs 1.3 billion, with EBIT margin at 9.3 per cent. Forging capacity utilisation improved modestly to 32 per cent.

Medium-Term Growth Drivers

Anand Rathi identifies Suzlon 2.0, the S175 platform, the DevCo model and selective international expansion as medium-term growth drivers, although these initiatives create near-term cost and working-capital pressure.

• The first domestic S175 delivery is expected by FY27.
• Suzlon has secured 602 MW under DevCo, supported by its land bank and grid connectivity, and plans to invest about Rs 5 billion in the model with an emphasis on capital recycling.
• Management retained capex guidance of about Rs 7 billion for capacity expansion, blade facilities and next-generation platforms.
• International revenue is expected to scale over 18-24 months through a selective focus on repowering markets and regions with an existing Suzlon fleet.

Earnings Estimates and Key Risks

Anand Rathi reduced its FY27E and FY28E EBITDA estimates by 3.3 per cent and 2.2 per cent, respectively, to reflect the richer EPC mix and delayed absorption of growth investments.

Key risks include execution and margin pressure from Suzlon 2.0, a slower transition to FDRE and co-development projects, and delayed scale or operating leverage in international expansion.