Investec has initiated coverage on Suzlon Energy Ltd. with a 'buy' rating and a target price of Rs 70, implying a 29.6% upside.
Broadly favourable macros boosting wind energy prospects have been cited as the primary reason for the initiation. The brokerage said the company is riding the winds of growth. This growth is supported with the order book soaring demand up to 5.5GW.
The unlevered balance sheet that is paired with strong operations and maintenance portfolio is set to deliver healthy return on capital employed.
Suzlon Energy is well-positioned to capitalise on the resurgence in wind energy. The strong order book further provides revenue and earning visibility for two to three years, according to the brokerage.
It highlighted the company's strong return ratios, robust bid pipeline and an optimised supply chain. Growing round-the-clock firm and dispatchable renewable energy tenders present growth prospects for engineering, procurement and construction services, Investec said.
The brokerage expects sales, Ebitda and net profit CAGR to see over 55% uptick over financial years 2024-27. It also expects the return on equity to expand to 32% in financial year 2027, against 28.5% in the previous year.
The stock has risen 22.64% in the last 12 months. The relative strength index was at 50.23.
About 63% of the analysts tracking the firm have changed their target price over the past month, according to Bloomberg. With one hike, there were four brokerages that lowered the target price.
Six out of seven analysts tracking the company have a 'buy' rating on the stock, and one recommend a 'hold', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 70.83, implying an upside of 29.1%.
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