Rebound ahead: Why Motilal Oswal sees 30% upside in Suzlon Energy
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Citing the draft RLMM (Revised List of Models and Manufacturers) notification that requires local content in wind turbines, domestic brokerage firm Motilal Oswal projects 30% upside in Suzlon Energy The brokerage firm has reiterated its 'buy' rating on the stock with a target price of Rs 75, stating that the stock is currently trading at 24x FY27E PE, which seems attractive after the recent correction.The stock has corrected from its high of Rs 86.04 to a recent low of Rs 51.10, which marks a decline of 40.6%.'The recent draft Revised List of Models and Manufacturers of Wind Turbines (RLMM) notification mandating local content in wind turbine manufacturing is a key medium-/long-term positive for Suzlon Energy (SUEL),' Motilal Oswal said in its report.The draft amendment mandates domestic manufacturing of key components—blades, towers, gearboxes, and generators—with a one-year exemption allowing limited imports (lower of up to 50 turbines or 200 MW). Local manufacturing of gearboxes and generators will become compulsory six months after the rules take effect.The brokerage firm noted that its channel checks indicate that power project developers are expected to request a deferment in the implementation of the draft notification, although there is broad consensus that its formal adoption is highly probable.It is anticipated that the said draft RLMM notification presents two key implications: 1) if regulatory approval is granted, competitive intensity is likely to moderate in the medium term, and 2) Suzlon has the potential to further expand its market share, as Indian OEMs currently account for only 50-60% of new orders, while the company's integrated domestic manufacturing capabilities span all key components.According to Motilal Oswal, other key positives for Suzlon include the rising share of EPC contracts in the order book and easing transmission issues.The brokerage notes that the company is targeting to increase its EPC share from 20% to 50% in the medium term, enhancing visibility and control over deliveries. Additionally, Indian OEMs exploring export opportunities could serve as a medium-term catalyst.The domestic brokerage firm also highlights strong earnings momentum ahead for the renewable energy player, projecting FY26 deliveries of 2.4GW, implying a quarterly run rate of 600MW, which they consider achievable given the 447MW delivered in Q3FY25.The firm estimates Suzlon's revenue and adjusted PAT to grow at a CAGR of 46% and 58%, respectively, over FY25-27. Additionally, key orders planned for FY26 reportedly have substantial land acquisitions completed and possess high power evacuation visibility.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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