Nuvama Sees Suzlon, Inox Leading Wind Energy Segment, Sees Upto 17% Upside

Brokerage Nuvama Institutional Equities initiated coverage on Suzlon Energy and Inox Wind, tagging them as beneficiaries of growth in wind energy segment.

What Happened: Nuvama believes India should add more wind energy supply to deal with the power deficit faced in the evening time.

India currently has a peak power deficit of 4% in the evening as solar energy gets cut off after evening hours. Increasing the wind power supply generally which picks up at night and during monsoon time will complement the solar energy, the brokerage argues. 

Nuvama initiated coverage on Suzlon with a "buy" call and target price of ₹53. It issued a "buy" call for Inox Wind with a target price of ₹193. This suggests an upside of around 17% for both scrips from current market levels due to the long term visibility of power demand til FY30 as wind will find its place in India's renewable energy transition story. 

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According to the analysts, Suzlon is the market leader in the wind turbine generator market with a 30% share, as well as among the two wind engineering, procurement and construction suppliers in India.

The company's growth visibility is backed by an industry tailwind of a 12-14 gigawatt total addressable market annually, a technological edge in 3 megawatt-plus turbines and 4.5 gigawatt-plus nacelle capacity, high margin operation and maintenance (O&M) service and a restructured balance sheet, the brokerage added. The company's order book has grown five-fold from 652 megawatts in FY23 to 3.3 gigawatts in May, it said. 

For Inox Wind, analysts expect the company to achieve order book and revenue compund annual growth rate of 44% and 73%, respectively, in FY24 to FY27.

Inox Wind's promoter Inox Wind Energy sold a 4.6% stake in the exchanges on Tuesday. 

Price Action: Suzlon Energy stock price rose 0.11% to ₹44 while Inox Wind fell 5.65% to ₹139.40

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Posted In: EquitiesNewsMarketsAnalyst RatingsInox WindSuzlon