JM Financial cuts Suzlon Energy target on execution hurdles; retains 'Buy'

JM Financial Institutional Securities has maintained ‘Buy’ on Suzlon Energy shares, but has cut the target to ₹66 per share from ₹78, as the brokerage believes Suzlon Energy is likely to struggle in maintaining growth momentum from FY28 in the absence of scalable diversification. 

 

At 9:52 AM, Suzlon Energy’s share price was trading 0.9 per cent lower at ₹53.8 per share on BSE. In comparison, the BSE Sensex was down 0.26 per cent at 82,286.86. 

Key reasons for Suzlon shares target cut:

Execution is challenging:

Persistent challenges around transmission connectivity, land acquisition, and right-of-way (RoW) are likely to cap India’s wind additions at 7–8 GW annually from FY27 in the base case (up to 10 GW in an upside scenario).

 

Growth moderation risk:

JM Financial expects Suzlon to find it difficult to sustain growth momentum from FY28 without scalable diversification, modeling executions of 2.5 GW/3.1 GW/3.5 GW in FY26/FY27/FY28 and Earnings before interest, tax, depreciation and amortisation (Ebitda) growth of 60 per cent/34 per cent/17 per cent year-on-year (Y-o-Y) over the same period.

Sector skew and grid stress:

Solar+BESS is taking a disproportionate share in tenders, even as over-reliance on solar raises grid-stability issues and increases curtailment/zero-tariff incidents. While the brokerage anticipates a policy recalibration to include more wind in hybrid projects, near-term tender flow remains tilted toward solar.  ALSO READ | JM Financial starts coverage with 'Add' on Tata Chemicals; stock rises 3%

Counterbalances and structural positives

Localisation moat:

Mandatory localisation of key wind components and data centres should blunt Chinese pricing advantages. With the most integrated domestic manufacturing footprint, Suzlon is seen as a prime beneficiary.

Demand validation:

Continued ordering of wind turbine generators by utilities such as JSW Energy, NTPC, Tata Power, and Torrent Power supports medium-term demand for wind.