New Delhi: Suzlon Energy’s stock had a little decline subsequent to Morgan Stanley’s downgrade, even though the brokerage house increased its price target because of the company’s promising growth prospects and full order book. Suzlon was lowered by Morgan Stanley from a “overweight” rating to “equalweight,” and the company raised its price objective for the stock from Rs 73 to Rs 88, indicating an 8% increase from Thursday’s closing price.
Suzlon’s stock has experienced impressive growth, more than doubling in value in the last six months, or a 111% increase. The Nifty 50 index climbed about 31% during the same period, but this rise exceeded it by a substantial margin. Morgan Stanley complimented Suzlon’s growing order book, robust financial sheet, and positive operating cash flows for this outstanding result.
Suzlon’s order book is now at a record high of around 5 GW. Given the low level of competition, Morgan Stanley analysts think the firm is still well-positioned to profit from India’s expanding wind energy market. In the upcoming years, they anticipate Suzlon to grow its market share to between 35% and 40%. Strong ordering activity is also being observed in the renewable energy sector, where it is anticipated that 32 GW of new orders would be placed between FY25 and FY30.
Morgan Stanley observed that Suzlon has been cautious in obtaining contracts, concentrating on its proportion of captive and commercial and industrial (C&I) clients in addition to landing a sizable order from NTPC. The brokerage did, however, issue a warning, stating that the business is not completely immune to execution-related risks, which may result from more general system problems or particular customer difficulties.
Suzlon’s acquisition of Renom, which allowed the business to join the multi-brand operations and maintenance (O&M) services industry, is a significant milestone. Morgan Stanley is keeping a careful eye on client sign-ups for this new endeavor since it may boost the company’s profitability in the future.
Notwithstanding the optimistic prognosis, Morgan Stanley issued a warning in response to the recent spike in Suzlon’s stock price. The firm would rather wait for better execution outcomes before taking a more bullish stance on the company since it believes that the risk-reward balance is more balanced at this point.
Morgan Stanley included updates on other electricity businesses in the same study. It boosted the price objective for Tata Power to Rs 577 and improved the company’s rating from “underweight” to “overweight.” With a reduced price objective of Rs 496, NTPC retained its ‘overweight’ rating. In contrast, Power Grid saw a drop from “overweight” to “equalweight,” despite an increase in its price objective from Rs 296 to Rs 362.
On the NSE, shares of Suzlon Energy were trading unchanged at Rs 81.46. The stock has increased by 111% in 2023 thus far, while the Nifty benchmark has up by 18%. Suzlon has increased by 217% in the last year, more than tripling the wealth of investors, whilst the Nifty index has increased by only 30% in the same time frame.
