Suzlon Shares Have Gone Up 43% This Year: Why This Analyst Sees Further 50% Rally

Shares of Suzlon Energy continued their dream run on Friday going up over 5% to hit an intraday high of ₹15.65. Analysts at ICICI Securities “believe that the wind industry is finally set to turn the corner” on the back of various favourable policy changes.

The Suzlon Analyst: The Mohit Kumar-led analyst team at ICICI Securities initiated its coverage for the stock with a ‘buy’ rating. The analysts assigned a price target of ₹22, indicating a close to 50% upside from the stock’s last closing price of ₹14.75.

The Suzlon Thesis: The firm highlighted that India has amended the wind energy policy, which adversely
impacted capacity addition between FY17-FY23. The firm said that changes like discontinuing the reverse auctions, introducing wind-specific RPOs, and plans to auction 10GW per annum will greatly benefit Suzlon.

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“Suzlon Energy as the market leader is best suited to reap the benefits of the same,” the analyst added. Talking about its leadership position the analyst said that with a market share of 33% in India's domestic market and a total capacity of 20GW of operational wind power capacity globally, Suzlon is well ahead of its competitors.

The analysts added that the company has also made inroads in repairing its balance sheet. “Suzlon has reduced leverage by restructuring its debt and raising money through a rights issue,” the analysts added. The firm highlighted that the net debt to EBITDA ratio on Suzlon's balance sheet has declined to 1x from ~10x in FY22.

Price Action: Suzlon’s share price was up 4.41% to trade at ₹15.40 shortly after the markets opened on Friday.

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Posted In: Analyst ColorPrice TargetInitiationAnalyst RatingsICICI SecuritiesSuzlon