Morgan Stanley downgraded Suzlon Energy shares, but raised price target due to strong order book growth and market potential.
Suzlon Energy has seen a 217% rally in the last year, outperforming the Nifty 50 by 31%. Morgan Stanley downgraded the stock to ‘equalweight’, but raised its price target to Rs 88 per share, indicating an 8 percent upside. The stock’s strong increase in order book and improved balance sheet contribute to its outperformance.At about 5 GW, Suzlon’s order book is currently at an all-time high. Morgan Stanley analysts think Suzlon can raise its market share to 35–40 percent in the future and that it will continue to benefit greatly from India’s wind energy success story in the face of mild competition.
Furthermore, they anticipate 32 GW of fresh orders over FY25–30, indicating that ordering activity in the renewable energy sector is still robust.Suzlon has been cautious in accepting orders, as seen by the sizeable purchase from NTPC, its high percentage of captive and C&I clients, and other factors. However, Morgan Stanley noted that it cannot be totally protected from execution risks, which might be system- or client-specific.
Suzlon’s purchase of Renom gives it access to a new multi-brand O&M market, and Morgan Stanley is expecting client sign-ups in this market, which will boost Suzlon’s profits growth.But with the current surge, the brokerage believes that Suzlon’s risk-reward is better balanced and that before it becomes positive again on the company, it has to witness improved execution relative to its base scenario.
Morgan Stanley boosted its price objective for Tata Power to Rs 577 and upgraded the company from a “underweight” rating to a “overweight” rating in the same study on power businesses. The firm upped the target price to Rs 362 from Rs 296 while downgrading Power Grid to “equalweight” from “overweight.” It kept its “overweight” position on NTPC and raised the goal to Rs 496.
At 12 noon, Suzlon Energy shares were trading largely flat at Rs 81.46 on NSE. So far this year, the stock has gained 111 percent, compared to an 18 percent rise in benchmark Nifty. In the last one year, the counter has rallied 217 percent, more than doubling investors’ capital. In comparison, Nifty gained 30 percent during this period.
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