Numbers

The Numbers

Suzlon trades at roughly 24x trailing earnings, 5.2x trailing sales, and 9.9x book value after a balance-sheet reset that took borrowings from ₹17,059 cr to ₹397 cr in twelve years and a delivery run-rate that has tripled since FY24. The single metric most likely to rerate or derate the stock is WTG EBITDA margin durability — every 100 bps of sustained margin compression at current ₹15,000 cr revenue strips ₹150 cr of EBITDA, while trailing reported PAT of ₹3,229 cr is itself flattered by ₹1,260 cr of deferred-tax-asset recognition that is now unwinding. The market is pricing flawless conversion of a 6.4 GW order book at peak operating leverage; the numbers below test whether that pricing is defensible.

1. Snapshot — what the company is right now

Trailing twelve months ended Dec-2025 sum to ₹15,029 cr revenue and ₹3,229 cr PAT — the second highest annual run-rate in company history and the first time since FY14 the absolute revenue line is rising into a structurally positive equity base. Net cash of ₹1,359 cr (₹1,756 cr cash and investments minus ₹397 cr debt) at H1FY26 is the cleanest balance sheet in the listed history.

2. Twelve-year revenue and earnings power

Revenue is still 47% below the FY14 peak in nominal rupees. Operating profit broke into structural positive territory only in FY22 after seven consecutive years of negative or near-zero operating income. The FY23 ₹2,887 cr PAT was 95% non-operating — a debt-restructuring gain in "other income" — which is why the FY24 reset to ₹660 cr underlying earnings is the more honest reference point.

3. Margin profile — pricing power or operating leverage?

Operating margin has held a 14–17% band across FY22–FY25, narrower than the prior cycle but not yet stable enough to call structural. The FY23 net margin spike (48%) and FY25 net margin (19%) both rode non-operating items — debt-restructure gain in FY23 and a -43% effective tax rate in FY25 from deferred-tax-asset recognition. Strip those and FY25 underlying net margin is closer to 13%, in line with FY17 — not a step-change.

4. Quarterly direction — recent trajectory

Revenue compounded at roughly 30% per quarter sequentially over the last three quarters; operating profit lagged that pace, holding 17–19% of sales. Net profit is jagged because deferred-tax-asset recognition (Q4 FY25 and Q2 FY26) inflated two quarters and Q3 FY26 stripped most of it back out — the operating profit line is the cleaner read on the underlying business.

5. Are the earnings real? Cash conversion

Five-year CFO-to-net-income conversion: ₹3,095 cr cumulative CFO vs ₹5,542 cr cumulative net income — a 56% conversion ratio. Below the 80% floor that flags clean earnings. The gap is partly working-capital absorption (debtor days re-expanded from 72 to 130 over FY23–FY25) and partly the FY23 ₹2,739 cr non-cash other-income from debt restructuring. FY24 CFO of just ₹80 cr against ₹660 cr reported PAT was the cleanest tell — receivables consumed almost all the reported profit in cash terms.

6. Free cash flow and capex intensity

Capex is light — under 4% of revenue in most years — because Suzlon expanded by re-using existing manufacturing footprint as utilization climbed from sub-30% to 70%+. FY25 capex stepped up to ₹368 cr (3.4% of revenue) ahead of nacelle line additions. FCF turned positive again in FY25 at ₹724 cr, but on a ₹2,072 cr PAT base the FCF/PAT ratio is 35% — still poor cash quality.

7. The balance-sheet rebuild — the single fact this stock rests on

Reserves crossed zero only in FY24 — meaning prior to that, accumulated losses exceeded share capital and the company technically had no equity buffer. The 2023 QIP and 2022 rights issue raised ₹3,300+ cr that, combined with the ₹2,887 cr FY23 restructuring gain, eliminated negative reserves. Borrowings of ₹397 cr at H1FY26-end against ₹1,776 cr fixed assets and a ₹1,756 cr cash position is the strongest balance sheet in the company's listed history.

8. Returns on capital — peak-cycle highs

ROCE has stair-stepped from 10% in FY21 to 33% in FY25. The FY17 spike of 53% — at a point where the company was accounting-profit-positive on debt restructurings — is a useful warning that ROCE on a thin equity base flatters the read. With reserves now positive ₹3,374 cr and rebuilt invested capital, the FY25 number is the first ROCE since FY14 that survives a normalized capital-base calculation.

9. Working capital — where cycles hide

Debtor days expanded from 72 (FY23) to 130 (FY25) while revenue accelerated — the classic late-cycle pattern where receivables grow faster than collections. Inventory days have moderated from the FY21 peak of 503, but the FY25 reading of 171 is still 67 days above FY23. Net working-capital absorption in FY26 is the single highest-conviction red flag in the numbers.

10. The critical valuation chart — Price/Sales vs its own history

The 12-year median P/S is 0.69x. Current TTM P/S of 5.16x is 7.5x the historical median and 39% off the FY24 peak of 8.4x. Even applying the FY24 peak multiple as a permanent re-rating premium (accepting the new business model deserves a structural step-up), today's multiple still requires revenue to compound above 30% for two more years to grow into the price. Bull-case execution is already in the multiple.

11. P/E and P/B history — only meaningful when earnings exist

Years with negative or near-zero EPS produce meaningless P/E — only seven of twelve fiscal years are ratio-able. The cleanest comparison is FY17 (12.7x P/E) versus today (23.9x P/E TTM): nearly double the multiple on a profit base that depends on ~₹650 cr of one-time deferred-tax-asset recognition. P/B at 9.9x current is the most extreme end of the equity multiple — only the FY24 reading of 14.0x was higher, and that was at a smaller book base.

P/E of 23.9x looks cheap against the 48x sector. But "sector" here aggregates conglomerates (Siemens, BHEL at 80x and above) trading on infrastructure-thematic premia, not WTG OEMs. Against the only direct peer, Inox Wind at 35x P/E and 5.0x P/S, Suzlon trades at a 32% P/E discount and a 3% P/S premium — the gap opens because Inox's earnings base is smaller and noisier, not because Suzlon has structural cheapness.

12. Quality scorecard — what the data says

The growth and balance-sheet halves of the scorecard are excellent. The cash-quality and earnings-quality halves are not. A reader who accepts the 41% ROE and ignores the 35% FCF/PAT is reading half the company.

13. Peers — apples-to-apples on multiples

Suzlon and Inox are the only true WTG-OEM comparables. They cluster within 3% of each other on revenue multiple and within 400 bps on operating margin — confirming there is no premium-pricing power between the two pure-play OEMs. Adani Green's 15.9x P/S and 67% operating margin reflect an IPP business model (asset-financed generation, not turbine sales) that should not be in a multiple-reversion calculation.

14. Fair value — three scenarios in native rupees

What the numbers confirm and contradict

Confirm: the balance-sheet repair is real (borrowings down 98%, reserves positive for the first time in a decade), operating leverage is real (16–17% OPM with revenue still 47% below peak), and the order book is real (6.4 GW vs 4.5 GW capacity). Contradict: the stock is not "almost debt free and cheap." On TTM P/S the multiple is 7.5x its 12-year median, on cash terms FCF converts only 35% of reported PAT, and FY25 net profit is materially flattered by deferred-tax-asset recognition that is now unwinding through FY26. Watch next quarter: debtor days (the ₹5,745 cr receivable at FY25 against ₹15,029 cr TTM revenue is already at 145+ days), the WTG EBITDA margin (a sustained reading above 18% would indicate pricing power has finally emerged), and the rate at which the order book converts at — book-to-bill below 1.0x for two quarters is the cycle signal.