Broker’s call: Suzlon (Add)
JM Financial
Suzlon Energy reported a Q2-FY27 revenue of ₹4,900 crore, marking a 26% year-over-year increase, but its EBITDA margin decreased to 15% from 18.6% in Q2-FY26. The reduction in EBITDA margin was primarily due to a higher EPC mix. Despite this, Suzlon delivered a strong 710MW of wind turbines, compared to 565MW in the previous quarter, and installations trebled to 454MW from 153MW in Q2-FY26.
The company's order book currently stands at 6GW, with a 38% EPC share, up from 32% in Q1. Management aims to increase this EPC share to 50% by FY28E. Based on the management's guidance, it is expected that deliveries will reach 3/3.3/3.5GW during FY27E/28E/29E. We anticipate margins and growth prospects for Suzlon to be under pressure from FY28 onwards due to the limited Indian market (7-8GW per annum), increasing competition (15-20GW industry capacity), and the growing pains of a single-product company.
During H1FY27, DevCo-led orders accounted for 70% of the order intake, totaling 1.1GW+. Suzlon secured a 400MW EPC order from Tata Power and a 202MW order from the Waaree group for S144 (3.15MW) WTGs. Management believes that these contracts have faster implementation due to land readiness. Consequently, we are downgrading Suzlon to 'Add' (from 'Buy') with a revised target price of ₹40, previously ₹46, based on a 12x Sep’28E EBITDA (implied 20x Sep’28 EPS).
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
