Suzlon Energy share price is in focus today. Nuvama Institutional Equities, in its latest report, has downgraded Suzlon Energy to a ‘Hold’ rating. The brokerage has also retained a target price of Rs 55, suggesting limited upside ahead despite the company’s strong order book and steady execution.
According to the brokerage report, Suzlon Energy remains one of the key beneficiaries of India’s clean energy transition. However, Nuvama believes the wind energy industry could be approaching a near-term growth plateau as competition from solar and battery storage projects intensifies.
The brokerage stated, “Downgrade to ‘Hold’ with a target price of Rs 55 (due to stock run up of ~15% since Q3 results).”
Execution remains stable, but future visibility turns uncertain
Suzlon Energy delivered relatively stable operational performance in Q4FY26. The company executed around 830 megawatts (MW) of wind projects during Q4FY26, slightly below brokerage estimates of 875MW.
Full-year execution stood at 2,456MW, marginally below the company’s own guidance of 2,500MW.
According to the Nuvama report, quarterly revenue was largely supported by turbine product supplies, although management indicated that Engineering, Procurement and Construction (EPC) activity also increased during the quarter.
Operational profitability remained broadly steady. Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) margin came in at 17.5%, almost in line with estimates, though slightly lower year-on-year.
The report stated, “Q4 execution in-line; management non-committal on future.”
That particular commentary appears to be one of the biggest concerns for the brokerage. While Suzlon continues to hold a strong order book of nearly 5.9 gigawatts (GW), which provides visibility until FY28, management refrained from offering growth guidance beyond that period.
Working capital pressure becomes a key concern
Another major issue highlighted by Nuvama is the deterioration in working capital conditions.
As per Nuvama report, delayed project commissioning and increasing execution of Public Sector Undertaking (PSU) projects have put pressure on Suzlon’s cash conversion cycle.
The brokerage stated, “WC deteriorates led by PSU order execution/delayed commissioning.”
Operating Profit Margin (OPM) also moderated compared to last year because of a rising EPC mix within the company’s order book.
Management is now targeting a future business mix of nearly 50% EPC and 50% product supply, compared to the current higher share of product-led execution.
Solar and battery storage competition starts reshaping the industry
One of the biggest structural concerns raised by Nuvama is the changing nature of India’s renewable energy market.
The brokerage report added that the wind energy growth could slow over the next few years as hybrid renewable projects, Firm and Dispatchable Renewable Energy (FDRE) projects and Battery Energy Storage Systems (BESS) become increasingly competitive.
The report noted, “We expect the wind industry to plateau at 8–10GW over two–three years.”
Nuvama estimates that Suzlon may maintain around 30-35% market share in the domestic wind sector, but annual execution growth may stabilise at nearly 3-3.5GW over FY27-28 instead of accelerating sharply.
Deferred tax asset benefit offers support, but valuation upside looks limited
One positive factor highlighted by the brokerage is Suzlon’s potential Deferred Tax Asset (DTA) creation.
Management indicated that the company could gradually recognise around Rs 3,000-3,500 crore worth of previously unrecognised deferred tax assets linked to past losses.
According to the brokerage, this has already been factored into its Sum-of-the-Parts (SOTP) valuation model.
The report stated, “Suzlon Energy expects additional DTA creation of Rs 3,000-3,500 crore on past losses.”
The brokerage has marginally cut FY27 and FY28 earnings per share estimates because of rising interest costs linked to working capital strain.
Nuvama added that Suzlon currently trades at around 29 times FY28 estimated earnings, which leaves limited room for further re-rating unless growth visibility improves meaningfully.
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