Shares of Suzlon Energy Ltd. have been downgraded by brokerage firm Morgan Stanley to “equalweight” from its earlier rating of “overweight.”
However, the brokerage has raised its price target on the wind energy solutions provider to ₹88 per share from ₹73 earlier. The revised price target still implies a potential upside of 8% from Thursday’s closing levels.
Morgan Stanley wrote in its note that Suzlon’s shares have doubled in value over the last six months, having risen 10-6% and outperforming the Nifty 50 index by 78 percentage points.
Suzlon’s outperformance was driven by the strong increase in order book and its improved balance sheet along with cash flows from operations. Suzlon’s order book is now at an all-time high, near the mark of 5 GW.
The brokerage has maintained that Suzlon continues to be a strong beneficiary of India’s wind energy growth story amidst benign competition and has the potential to increase its market share to between 35% and 40% going forward.
Ordering activity in the renewable energy space remains strong and Morgan Stanley is expecting 32 GW of new orders over financial year 2025-2030.
“Suzlon has been prudent in taking up orders and the same is also reflected in its high share of C&I and captive customers and the large order from NTPC. But it cannot be completely insulated on execution risks, which are system-related or client specific,” Morgan Stanley wrote in its note.
The acquisition of Renom by Suzlon provides the company an entry into the new multi-brand O&M business and Morgan Stanley is awaiting customer sign ups in this business, which will add to Suzlon’s earnings growth.
However, post this recent run-up, Morgan Stanley sees Suzlon’s risk-reward as more balanced and now wants to see stronger execution as compared to its base case before it turns more constructive on the stock again.
Post the downgrade, only two out of the five analysts who have coverage on Suzlon Energy have a “buy” rating on the stock, while the other three have a “hold” recommendation. Despite the downgrade, Morgan Stanley’s price target on Suzlon is the highest on the street.
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