Suzlon Energy’s acquisition of operations and maintenance player Renom is expected to help it grow its market share and expand to new markets.
The wind turbine manufacturer recently announced acquiring a 76% stake in Renom Energy Services, the country’s largest multi-brand renewable energy operations and maintenance service (OMS) company, from the Sanjay Ghodawat Group (SGG).
Post-acquisition, Renom will continue to operate as an independent board-managed independent service provider. Its portfolio includes 1,782 MW wind, 148 MW solar, and 572 MW BoP (balance of plant) under maintenance across customer segments.
Morgan Stanley, which issued an ‘overweight’ rating on Suzlon, sees the acquisition as a strategic entry into the multi-brand OMS sector, with an implied valuation of four times price to sales ratio, which is seen as relatively attractive compared with listed peers.
Analysts at JM Financial said: “With a fleet of 2.5 GW across 14 different makes, skilled manpower (over 850) and market leadership, Suzlon is likely to leverage Renom for capturing 32 GW non-Suzlon OMS market (10 GW immediate opportunity), which is growing with India’s target of 100 GW wind energy capacity by FY30.”
The acquisition will expose Suzlon to new sites, potentially benefiting from emerging re-powering opportunities, the JM Financial analysts said, adding: “We believe the acquisition represents a strategic move by Suzlon, enhancing its capabilities, expanding its market presence, and creating value.”
Renom, with a fleet growth of 30% CAGR since FY20, is likely to report a Rs 55-crore Ebitda in FY25, which can grow two times by FY27.
Suzlon has an installed wind energy capacity of 20.8 GW and has a market share of 32%.
Suzlon’s in-house OMS will focus on the current Suzlon fleet in India of ~15 GW and a growing order book, while Renom will continue to focus on non-Suzlon wind turbine services market of ~32GW and growing in India, the company said after the announcement.
The company’s management is upbeat about synergies from the acquisition.
JP Chalasani, chief executive officer, Suzlon Group, said: “With Renom’s leadership position in the independent service provider market, its significant fleet, strong presence across all seven windy states, and extensive experience with nearly 14 different turbine makes and models, this acquisition will give Suzlon a substantial advantage in the multi-brand O&M industry.”
Chalasani further said Renom’s established processes, access to supply chain and trained manpower for different turbine makes and models, developed over the years, will give Suzlon a head start of 18-24 months for fleet expansion.
Suzlon will also have the opportunity to cross-sell both turbines and O&M services to non-Suzlon customers, expanding its market reach and increasing revenue potential, he added.
Suzlon Energy shares on Wednesday fell by 4.96% to Rs 76.78. The company’s shares have risen 15.9% from Rs 66.26 to Rs 76.78 in the past six trading sessions.