Geojit Investments has reaffirmed its optimistic stance on Suzlon Energy Limited, issuing a BUY recommendation with a revised target price of Rs 75 per share. Despite recent volatility and execution challenges, Suzlon’s robust order book of 5.7 GW and the strategic focus on capacity utilization have driven a significant revenue surge and margin expansion. The company is expected to deliver a compound annual revenue growth rate (CAGR) of 42% over FY25 to FY27, supported by a 43% CAGR in earnings. Valuations currently trade at a price-to-earnings (P/E) multiple of 27.7x for FY27, highlighting a potential undervaluation and compelling case for investors looking for mid-cap exposure in the renewable energy sector.

Quarterly Highlights: Strong Revenue Growth and Profit Margin Expansion

Suzlon’s Q1FY26 performance kicked off impressively, with consolidated operating revenue leaping 55% year-over-year (YoY) to Rs 3,132 crore. This surge was mainly powered by the Wind Turbine Generator (WTG) business, which grew by 62% YoY delivering 444 MW in capacity. The forging division demonstrated remarkable strength, posting a 60% YoY increase in revenue to Rs 146.49 crore, with the company’s market share in this segment jumping from 40% to 62%. The Operations & Maintenance Services (OMS) segment achieved a modest 10% YoY growth in the same quarter.

Further boosting profitability, Suzlon’s higher capacity utilization enabled operating leverage to shine through, expanding EBITDA margin by 82 basis points to 19%, with EBITDA reaching Rs 599 crore, up 62% YoY. Profit before tax (PBT) climbed 52% to Rs 459 crore, though a deferred tax charge capped the net profit (PAT) growth to a modest 7% at Rs 324 crore.

Robust Order Book and Future Revenue Visibility

One of Suzlon’s most compelling strengths remains its order book, which has now exceeded 5.7 GW — marking ten consecutive quarters of growth. This enduring demand is fuelled by strong traction from both the Commercial & Industrial (C&I) and Public Sector Undertaking (PSU) segments. The company’s pipeline is well fortified with projects that provide revenue visibility extending 2 to 3 years ahead, despite ongoing headwinds from delays in power purchase agreements (PPAs) and challenges in land acquisition.

To counteract these delays, Suzlon is prioritizing projects with ready land and advancing a strategic shift toward proactive land acquisition, positioning the company to improve commissioning timelines starting in FY27.

Strategic Expansion in Forging and Export Opportunities

Suzlon’s SE Forge operations stand at a pivotal moment, poised for expansion aligned with the Ministry of New and Renewable Energy’s (MNRE) Advanced Local Manufacturing Module (ALMM) guidelines and Bureau of Indian Standards (BIS) regulations. The company’s integrated backward operations provide a competitive moat, strengthening supply chain resilience in an increasingly protectionist policy environment.

Export opportunities for the forging business loom large, with prospects opening in neighboring countries, the Middle East, and Europe. These markets are expected to gain momentum later this year, diversifying revenue streams and boosting overall growth.

Financial Projections and Valuation Metrics

Geojit has revised its estimates upward, forecasting Suzlon’s consolidated revenues to rise from Rs 17,092 crore in FY26 to Rs 21,934 crore by FY27—a healthy growth of 28% year-over-year in FY27. EBITDA is expected to grow by 31% year-over-year, reaching Rs 3,997 crore in FY27, with EBITDA margins stable around 18%. Adjusted net profit is projected to soar by 37% in FY27 to Rs 2,916 crore. Earnings per share (EPS) will likely see corresponding growth from Rs 1.6 in FY26 to Rs 2.2 in FY27.

Valuation multiples have been tempered slightly to accommodate execution risks, with the target P/E multiple revised from 38x to 35x on FY27 estimated EPS. This still compares favorably in the mid-cap universe, implying significant upside from the current market price of Rs 60.

Financial Health and Balance Sheet Strength

Suzlon’s balance sheet remains robust and debt-free, with a net debt-to-equity ratio effectively at zero. Cash reserves are projected to rise further—from Rs 2,313 crore in FY26 to Rs 3,067 crore in FY27—supporting capital expenditure and organic business expansion.

The company's improved working capital management is reflected in stable receivable days, declining inventory levels, and a current ratio above 1.7x, indicating comfortable liquidity. Return on equity (ROE) is forecasted to rise from 27.2% in FY26 to 27.1% in FY27, underscoring the quality and profitability sustainability of Suzlon's growth trajectory.

Target Price, Stock Levels, and Investment Recommendation

Geojit sets a BUY rating on Suzlon Energy with a 12-month price target of Rs 75, representing an upside potential of approximately 25% from the current share price level of Rs 60. The following levels serve as key reference points for investors:

Investors should note that while Suzlon is well positioned structurally and financially, the key risk remains execution, particularly related to commissioning delays and policy instability surrounding PPAs and land acquisition.

Suzlon Energy: A Compelling Growth Story with Moderate Risks

In sum, Suzlon Energy offers an attractive investment opportunity driven by strong order inflows, expanding operational scale, and enhanced margin leverage. The company's compliance with government-mandated manufacturing policies and forward integration into forging ensures a competitive moat and sustainability in earnings growth.

While near-term earnings volatility tied to project execution and tax timing exists, Geojit’s revised BUY recommendation at a target price of Rs 75 provides a compelling risk-reward proposition for investors seeking exposure to India’s renewable energy transition.