ICICI Securities research report on Suzlon Energy
The Indian power grid needs more wind in its mix. The need to enhance wind capacity addition (post subdued activity in the recent past) has finally dawned upon the stakeholders. Grids are looking for a solution to meet demand effectively while containing carbon emissions. The supply of renewables can be increased by setting up a mix of wind, solar and battery storage capacities. Optimal solutions for the grid to meet demand by using renewables includes higher wind in the mix (of ~8GW per annum) led by the complementary nature of generation and cost curves of the wind. As a result, India has launched series of policy initiatives: 1) single-stage closed bidding (vs reverse e-auction), 2) 10GW of wind auction per annum, and 3) wind-specific RPOs etc. These policies are likely to generate tailwinds for the industry and, we believe, Suzlon Energy (Suzlon), the market leader, is best suited to reap the benefits of the same. Also, the ‘net debt / EBITDA’ ratio on Suzlon’s balance sheet has declined to ~1x (from ~10x in FY22). Initiate with BUY.
Outlook
We believe Suzlon is best equipped to benefit from industry tailwinds. We expect a sharp uptick in earnings FY24E onwards. Initiate with BUY and a target price of Rs 22 per share (assigning a multiple of 24x FY25E EPS).
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
