Suzlon Energy shares saw a bumper jump, ICICI Securities revised its target from Rs 70 to Rs 80

Due to a recent strong increase in the share price, ICICI Securities has increased its target price for Suzlon Energy Ltd. from Rs. 70 to Rs. 80. Despite this change, the company has maintained its ‘Add’ recommendation on the stock. It assigns a 50 times value to Suzlon Energy’s projected FY26 profits per share of Rs 1.60.

Suzlon Energy has recovered after a turbulent ten years, according to ICICI Securities. Suzlon Energy successfully raised stock worth Rs 2000 crore in Q2FY24 for debt reduction, which allowed it to become net cash positive with a cash reserve of Rs 1,300 crore as of June 2024. Over the previous three years, the company has lowered its debt via a variety of debt to equity conversions.

Suzlon Energy has just reached a deal to sell and lease back its excellent real estate in Pune for the next five years. The total price of the acquisition is Rs 440 crore. For the purpose of selling its corporate headquarters, “One Earth Property,” Suzlon Energy has signed a conveyance document with OE Business Park (OEBPPL).

According to the agreement, Suzlon Energy would be granted a five-year lease back to the One Earth Property once the transaction was completed, along with the opportunity to sublease and get a license.

Suzlon Energy will use the funds acquired to improve execution and capacity to acquire more orders, according to ICICI Securities. It said that this is consistent with its April 2022 plan to sell non-core assets.

Suzlon Energy’s orderbook has grown to 4GW, the biggest level in its history, and the local brokerage thinks there would be ample room to add a sizable order intake in FY25.

“The execution for the next two years is shown in Suzlon’s current orderbook. Furthermore, several orders totaling around 1.5 GW from public sector organizations still need to be completed. In FY25E and FY26E, we are factoring in an order inflow of above 2GW. Sustain ADD with an updated 80 rupee target price, it said.

It has chosen to sell the asset despite having a solid balance sheet thanks to consistent profitability and a QIP capital raising. With the industry seeing positive trends, the five-year sale and lease back transaction was finalized at a favorable moment, according to ICICI Securities.

Previously, Suzlon Energy paid Rs 660 crore to purchase a 74% share in Renom Energy Services’ third-largest party O&M business. According to ICICI Securities, it wants to use its competencies to grow the O&M industry.

“Renom is the largest operations and maintenance service provider in the country with assets of 1,782 MW in wind, 148 MW in solar, and 572 MW in BOP under maintenance across customer segments,” stated the statement.