Company Overview:

A leader in wind energy space since 1995, Suzlon offers a 360-degree solutions package to its customers that covers the entire spectrum of wind energy projects. With over 12,640 wind turbines installed across six continents and 14 world-class manufacturing units in India, Suzlon wind energy solutions have become the byword for innovation and competitive advantage. Providing an all-encompassing solution to wind-energy projects in the form of Wind Turbine Generators (WTGs) that are infused with state-of-the-art technology from their blades, nacelle, towers and foundations. These WTGs carry the hallmark of reliability and sustainability and have a proven track record of enabling customers to maximize their return on investments. Suzlon's over 27 years in providing renewable energy solutions and deep knowledge of wind energy has helped it to become of the world's largest and leading producers of wind turbines in the world. The organisation also pioneered the 'Concept to Commissioning' model in wind energy, enabling it to meet the breadth and depth of customer requirements across the renewable energy value chain. The multi-dimensional approach adopted by Suzlon to value engineering and cost reduction provides better margins and a competitive advantage to its customers thereby being able to provide and sustain the very best in renewable energy solutions while maintaining an eco-friendly approach.
Suzlon is one of the world's leading producers of Wind Turbines Generators (WTGs) that carry the hallmark of reliability and sustainability. Along with its world-class products, Suzlon offers a range of services that complement the products and help to derive maximum efficiency from them. Suzlon Reliability (SURE services) is Suzlon’s assurance of dependability at every stage of investment, which is a suite of services designed to ensure optimum performance, higher yields and maximum return on investment.

Renewable Energy Services

Suzlon currently is the custodian of WTG assets worth more than 12 billion USD globally. It is using advanced infrastructure to service 9,890+ WTGs with a total installed capacity of over 20 GW. The first WTG installed more than 25 years ago is still working with an excellent track record with the right kind of monitoring. Suzlon has more than 2.5 million cumulative hours of servicing experience on this WTG. Suzlon has the necessary competence to service a diversified portfolio — ranging from a 225 kW plant to a 3,000 kW. 3,400+ people worldwide are employed in the exercise of monitoring the WTGs and ensuring that they run efficiently. Suzlon also provides OMS for its commissioned solar energy projects. In addition to this, Suzlon provides OMS services for Multi make WTGs.

Key financial triggers:

Consolidated net worth has turned positive after 10 years, and it is at INR1,099 crores for FY '23. Net debt has reduced from INR13,000 crores on 31st March 2020 to INR1,180 crores as of 31st March 2023. This is a reduction of more than 90%. Our consolidated FY '23 PAT before any exceptional items has turned positive after the period of 6 years and is at INR167 crores for FY '23 on a consolidated basis. This is as compared to FY '22 PAT of negative INR249 crores last year. With the continuous focus on deleveraging our balance sheet, Suzlon have achieved substantial reduction in our net finance costs as well. For FY '23, our net finance cost stands at INR401 crores, which was at INR712 crores for FY '22, yielding into a reduction of close to INR311 crores, which is a reduction of 44% in the finance costs. Hence, there is a marked improvement on all our financial parameters, like net debt to EBITDA pre-foreign exchange is at 1.4x for FY '23 vis-a-vis 7x for FY '22. And our net interest coverage ratio for FY '23 is 2.1x versus 0.9x for FY '22. Inflation for us is under control as an economy and commodity prices have also stabilized, showing great resilience going forward.

Growth Drivers:

• The use of renewable energy instead of coal will save India ₹54,000 cr per year. In the period upto 2025, ~ 15,000 MW of wind and solar hybrid capacity is expected to be added. According to the Central Electricity Authority (CEA), renewable energy generation will increase to 44% by 2029-30 while thermal energy generation will decrease to 52%. The CEA also predicts that India's power demand will rise to 817 GW by 2030. SUZLON understands the sector's strengths and opportunities and has the necessary manufacturing capacities that will not necessitate significant capital expenditure for the next generation of turbines.
• In a big boost to off-shore wind energy projects, the Government has given complete waiver of ISTS charges for 25 years to projects commissioned on or before December 31, 2032. Besides, the ISTS waiver of Green Hydrogen and Green Ammonia projects extended from June 30, 2025 to December 31, 2030. Further, to promote development of Pump Storage Plants (PSP), the criteria for availing the complete waiver of ISTS charges for PSP projects has now been linked to the date of award of the project rather than commissioning of the project. This shall be applicable in cases where construction work is awarded on or before June 30, 2025.
• SUZLON’s cumulative orders as of May 30, 2023, reached of 1,542 MW which is the highest since 2019 and includes the order book as on March 31, 2023 of 652 MW plus orders and secured subsequently orders of 890 MW. Out of this 780 MW is for its new 3 MW series demonstrating the immense trust that its customers have in SUZLON's expertise and product technology.
• SUZLON responded to the market requirement of a larger wind turbine through its S144 - 3 MW series technology platform.
• SUZLON’s 20-GW wind energy installations generates sufficient green electricity to power 13 mn + Indian households. Additionally, these installations have effectively prevented ~ 51.35 mt of CO2 emissions annually, highlighting the vital role of wind energy in mitigating climate change.
• SUZLON directed its efforts in strengthening itself to leverage the sector’s favourable conditions.
• Suzlon Group has bagged a significantly large order for its new 3 MW series of wind turbines to develop a 300 MW wind power project for Torrent Power. SUZLON will install 100 wind turbine generators (WTGs) with a Hybrid Lattice Tubular (HLT) tower and a rated capacity of 3 MW each. This is the sixth and the largest order for the new Suzlon 3 MW series in less than a month.

Extension of capacity and Order book:

A significantly large order has been received for its 3 MW series of wind turbines from Serentica Renewables, a decarbonization platform, that seeks to accelerate the energy transition for energy intensive industries. This is the fifth order for the Suzlon 3 MW series in less than a month. An order received for the development of a 69 MW wind power project for the Indian subsidiary of a leading Nordic Energy Company. This is the fourth order of the larger wind turbine model from the new 3 MW series ‐ the S144‐140m. Received an order from Vibrant Energy for 33 wind turbine generators (WTGs) featuring its new 3 MW series with a Hybrid Lattice Tubular (HLT) tower for a 99 MW wind power project. This is the third order of the new Suzlon 3 MW series in less than a month. Bagged the second order of the 3 MW product series for the development of a 69.3 MW wind power project for Juniper Green Energy. SUZLON will install 22 wind turbine generators (WTGs) with a Hybrid Lattice Tubular (HLT) tower of their new product with a rated capacity of 3.15 MW each. The project is located at Gujarat and is expected to be commissioned in 2024. This is the first major order for the largest turbine rated 3.15 MW, S144‐140m from the 3 MW series. New order has been won for the development of a 25.2 MW wind power project for Sri Kumaraswamy Mineral Exports.
Secured an order of its 3 MW product for the development of a 39 MW wind power project from First Energy 5 (First Energy), a Thermax Group company. This order is part of a 100 MW Wind‐Solar Hybrid project by First Energy 5. Won order for the development of a 50.4 MW wind power project for Sembcorp’s renewables subsidiary Green Infra Wind Energy. SUZLON remains committed to partnering with global and local players to accelerate the global energy transition towards a carbon-neutral future while also addressing India's energy needs.

Product range:

SUZLON's product range has evolved over years with focus on reducing the annual Levelised Cost of Energy (LCoE), increasing efficiency, and maximizing energy output from low wind sites. On the product side, it debuted its 3 MW product series, a customizable and versatile platform that can accommodate site specific requirements. SUZLON installed India’s tallest wind turbine at 160 meters in FY23 to maximize yields from low wind sites. This year SUZLON introduced the S144 wind turbine, which has a bigger rotor of 144 meters and is available at 105 m, 140 m, and 160 m of hub heights. The nominal power rating is 3 – 3.15 MW, with a site specific booster as an option to ensure a high plant load factor and utilise specific grid potential.

TECHNICAL VIEW:

Technically Suzlon has come out of long term bearish trend with price and volume breakout on monthly chart forming Cup pattern above level of 12.3, and giving trend line breakout above levels of 12.7 on closing basis on 7th June 2023. We see stock is well placed and have a strong hold of market share in wind energy segment, increasing demand and dependence on Renewable energy triggered focus on Suzlon energy and management focus on debt reduction and new product launch. So keeping technical view intact we recommend Buy Suzlon at Rs 14 keeping Support level near 12 we suggest target of 26 with horizon of 1year time.

Valuation and outlook:

SUZLON had comprehensively addressed challenges over the past three years and achieved remarkable results, reducing net debt by over 90% during that time. It closed FY23 with a strong financial performance and the successful launch of its powerful 3 MW technology platform. Its key strategic initiatives remain on track to fuel the long term growth supported by encouraging policy initiatives and increasing market demand. SUZLON is looking forward to strengthening relationships in the next phase of its growth. We recommend BUY and Hold strategy with target price of 26 for the period of 1 year considering strong support near levels of 12.