Suzlon Energy Q2 Review: Morgan Stanley Notes Strong Momentum, Lifts Earnings Forecasts – Check Target Price

Suzlon Energy Ltd. on Tuesday posted a six-fold rise in profit in the quarter ended September. According to Morgan Stanley the results reflected strong execution, margin gains and a robust order book. However it pointed that tax rate clarity and working capital levels warrant monitoring.

Morgan Stanley maintained its overweight rating on Suzlon Energy with an in-line industry view and a price target of Rs 77, implying a potential upside of around 30% from the current level of Rs 59.

The brokerage highlighted that revenue, Ebitda and adjusted profit grew by 84%, 145% and 180% year-on-year, exceeding its estimates by 29%, 31% and 83%, and beating street expectations by 25%, 49% and 94%.

Ebitda margin stood at 18.6%, up 65 basis points from a year earlier. Interest expenses were 15% lower than expected, while other income was slightly higher. The tax rate, excluding deferred tax, was just 0.2% compared to the forecast of 25.2%, with clarity awaited on this front.

Operationally, Suzlon reported wind turbine generator sales of 565 MW against Morgan Stanley’s estimate of 410 MW, with first-half deliveries of 1 GW. The company has visibility of 1.86 GW for the second half, implying a total of 2.5 GW for FY26, with upside potential.

Contribution margin in the quarter was 28% versus the estimated 24%, while EBIT margin stood at 14.8% against 12% expected. The order book remained strong at 6.2 GW, and the balance sheet was healthy with net cash of Rs 1,480 crore, down from Rs 1,940 crore at the end of fiscal 2025.

On the downside, the operations and maintenance services segment EBIT margin fell to 25.3%, down 935 basis points year-on-year. Capex in the quarter was Rs 298 crore, and receivables remained elevated at 129 days.

Shares of Suzlon Energy rose as much as 2.55% higher at Rs 60.75 apiece on the NSE. It pared gins to trade 1.45% higher at Rs 60.15 compared to a 0.40% fall in the benchmark Nifty as of 1:24 p.m. The stock has fallen 11.98% in the last 12 months and 3.28% on a year-to-date basis.