SUZLON - SUZLON ENERGY LTD. Share Price

In the Q3 FY26 Earnings Conference Call, management of Suzlon Energy Limited provided an optimistic outlook underscoring significant growth and operational milestones. Mr. J.P. Chalasani, Group CEO, reaffirmed that the company is on track to achieve its FY26 guidance of 60% year-on-year growth across key performance indicators, with no planned downward revisions.

During the quarter, Suzlon achieved a record 617 megawatts (MW) of deliveries, marking the highest ever quarterly deliveries in India's history, and an order book reaching an all-time high of 6.4 gigawatts (GW). This success was driven by over 3 GW of new order wins, resulting in a robust book-to-bill ratio of 1.9x. With 54 GW of installations and a strong pipeline of bids, management anticipates the Indian wind sector to surpass 10 GW in installations over the next two years, with the near-term target of reaching 100 GW by 2030.

Key forward-looking points include the establishment of three AI-enabled smart blade factories and the expansion of Suzlon's EPC offering from 20% to 27%. The company also revealed significant ongoing projects, with 2,354 MW in active execution and expectations for 25+ GW of development pipeline.

Financially, Suzlon reported a revenue of INR 4,228 crores and an EBITDA of INR 739 crores for Q3 FY26, showcasing a 48% YoY growth. The company expects notable improvements in its forging and foundry business, predicting continued revenue growth supported by strong domestic demand and export opportunities. Suzlon aims to capitalize on evolving market dynamics, particularly in the context of international trade agreements with the EU and the US.

Management emphasized commitment to operational excellence, strategic planning in project development, and enhancing the company's competitive edge in the renewable energy sector as foundational elements for sustained growth.

Q1: How many megawatts of the 2,354 execution pipeline are pre-FY '25, and how much of the INR 5,745 crores in trade receivables is due beyond one year?

J.P. Chalasani: Approximately 50 to 60 megawatts from the 2,354 are pre-FY '25. A significant part of this delay is linked to a single project in Karnataka, primarily due to land issues.

Rahul Jain: Out of the total receivables, around INR 2,100 crores are milestones yet to be completed. Therefore, about INR 3,600 crores are receivables due mostly within a year, and while some overdue amounts exist, they are not substantial.

Q2: Why did WTG EBITDA margins dip in Q3 from previous quarters? Is it related to an increased EPC mix?

J.P. Chalasani: The dip is attributed to two factors: the average sales price decreased in Q3 due to customer mix, affecting around 190 basis points, as well as increased project revenue that has lower margins than turbine supply.

Q3: What is the implication of launching DevCo on the Suzlon balance sheet and ROCE moving forward?

J.P. Chalasani: DevCo won't require significant balance sheet commitments. We plan a focused approach to site identification for future projects without compromising our existing execution capabilities. The idea is to optimize land acquisition and team resources efficiently, thus enhancing execution.

Q4: How confident are you about growing your order book given the current weak renewable tenders?

J.P. Chalasani: Our current order book comprises 51% from C&I segments, with an increase in state-level bidding. Recent central auctions have shown strong demand for standalone wind, indicating that while bidding at the central level paused, potential in state-level bidding remains strong.

Q5: Can you elaborate on your export opportunities following the EU FTA and U.S. trade deal?

J.P. Chalasani: We are now focusing more on Europe due to uncertainty in the U.S. market regarding wind energy. We expect traction in export orders starting FY28, with significant efforts in Europe and other international markets being led by our newly appointed President for Europe.

Q6: How is Suzlon planning to address the competition from Chinese peers launching cheaper turbines?

J.P. Chalasani: We are in the proto stage of our 5 megawatt turbine launch. While we observe market changes, our existing 3.15 and 3.3 megawatt turbines remain competitive. We are cognizant of land acquisition issues tied to larger turbines, and our strategy remains flexible.

Q7: With your strong performance and guidance, will you adjust your forecast for FY '26?

J.P. Chalasani: We maintain our FY '26 guidance of 60% growth. We remain confident that we will fulfill this target, meeting expectations in execution and order bookings despite the complexity of market dynamics.

Q8: Could you provide clarity on your working capital requirements and associated contracts?

J.P. Chalasani: Peak working capital requirements stem from public sector projects and delayed payments. Our plans for the development company should help streamline our processes in future projects, thus stabilizing working capital needs moving forward.

Q9: What's the current status of your DTA and its impact on effective tax rates?

Rahul Jain: Upon full recognition of our deferred tax assets, we expect an effective tax rate around 25%. Even if we earn profit, the existing DTA allows for negligible cash outflows in the near term, ensuring our operational flexibility.

Q10: What are the developments in AI that you are implementing?

J.P. Chalasani: We aim to digitize our OMS system using AI for better predictive maintenance. This strategy will allow monitoring turbine efficiency and proactively address maintenance needs, improving uptime and potentially EBITDA margins.