Suzlon Energy Ltd experienced a significant drop in its stock price, falling by 2% to Rs 55.89 on August 28, 2023. This decline marks the company’s lowest trading level in three months and extends its overall loss for August to 8%. If the trend continues, Suzlon is on track for its third consecutive monthly loss, highlighting a growing caution among investors.
Concerns surrounding Suzlon primarily stem from execution issues and recent leadership changes. The company has faced challenges following disappointing earnings for the June quarter and a general slowdown in project execution. Investor sentiment has been further dampened by the announcement of Himanshu Mody, the Group Chief Financial Officer, stepping down. Mody has been recognized for his role in stabilizing the company’s balance sheet, and his departure raises questions about future stability.
Execution Challenges and Strategic Focus
The recent selling pressure on Suzlon shares is closely linked to mounting short-term challenges. The company has reported that project installations have lagged behind deliveries, with new order inflows for the fiscal year 2026 only reaching 1 GW, significantly below expectations. To mitigate these challenges, Suzlon is focusing on land-ready projects and advancing land acquisition processes, aiming to enhance project commissioning and execution timelines from fiscal year 2027 onward.
Despite these hurdles, Suzlon maintains a robust order book totaling 5.7 GW, marking the tenth consecutive quarter of growth. This positive trend reflects strong demand from Commercial & Industrial (C&I) players and public sector unit (PSU) customers. Analysts suggest that while the company faces execution risks and uncertainties related to Power Purchase Agreements (PPAs) and land acquisitions, the overall outlook remains promising, particularly as global investments in renewable energy continue to surge.
Future Growth Projections
Management has reiterated ambitious targets, projecting a growth rate of 60% across deliveries, revenue, and EBITDA for fiscal year 2026. The company anticipates that India will add 6 GW of wind capacity in FY26 and between 7-8 GW in FY27. These goals reflect a broader optimism within the renewable energy sector, as India strives to expand its wind energy capacity in alignment with sustainable development objectives.
Despite the recent decline, analysts remain cautiously optimistic regarding Suzlon’s potential recovery. Geojit Financial Services has upgraded its rating to “buy,” although with a revised target price of Rs 75 due to execution delays. The firm projects that Suzlon’s earnings could compound at a 43% CAGR, with a return on equity expected to reach 27.1% by FY27. Similarly, ICICI Securities has maintained a buy rating with a price target of Rs 76, citing confidence in the strength of the company’s order pipeline.
While Suzlon Energy faces immediate challenges related to leadership transitions and project delays, its strong order book and favorable industry conditions provide a foundation for long-term growth. For investors, the recent decline in stock price could represent a potential opportunity, contingent upon the company’s ability to address its execution challenges and maintain fiscal discipline.