Suzlon‘s shares have remained under pressure for the past few weeks. The stock has gone down around 13% in the last 30 days and analysts at Ventura see further downside.

The Suzlon Analyst: Analysts at Ventura issued a “sell” rating and a 24-month target price of ₹50. The target indicates a downside of around 27% from the current market price of around ₹69.

The Suzlon Thesis: Ventura highlighted Suzlon Energy’s significant turnaround, noting the company’s return to a net cash position in FY24 — the first time since FY06 — following successful debt restructuring, asset sales and favourable sectoral tailwinds.

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Suzlon, which holds a 32% share in India's wind turbine market, is expected to experience strong growth with forecasted revenue, EBITDA and net earnings annual growth rates of 47.6%, 47.5% and 66.2%, respectively, over FY24-27.

The brokerage projects steady EBITDA margins at 15.7% and anticipates net margins to improve by 432 basis points to 14.4%, supported by a strengthened balance sheet and enhanced free cash flow.

Despite these optimistic growth projections, Ventura raised concerns over Suzlon’s current valuation. The analysts noted that while Suzlon and Inox Wind are set to capture most of the wind turbine market due to reduced competitive intensity, Suzlon’s valuation multiples reflect excessive optimism.

Even with potential demand and Suzlon's dominant market position, the stock appears overvalued, presenting limited room for upside and considerable risk related to cash flow generation and execution.

Earlier in the week, the company posted its earnings for the quarter ended September. The wind energy major's net profit for the quarter stood at ₹200.2 crore, a 97% jump from the ₹102 crore posted in the same quarter last year.

Price Action: Suzlon’s share price was up 0.36% to trade at ₹69.12 in early trade on Wednesday.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.