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Summary: Suzlon's sales are at a record, yet it keeps less of every rupee it earns. Is the shrinking margin a crack in the business or something else? And why does the market value its closest rival's earnings more highly? The answer lies in the kind of work Suzlon now wants to do.
Suzlon delivered 710 MW of wind turbines in India in Q2 FY27: revenue rose 26 per cent to Rs 4,869 crore, the order book past 6 GW. EBITDA stayed flat at Rs 720 crore as margin fell from 18.6 to 14.8 per cent. Management has cut FY27 margin guidance to about 15 per cent from 17; the stock fell 10 per cent to a 52-week low of Rs 33.23, down 36 per cent this year.
How Suzlon makes its money
Suzlon runs three businesses, each at a different margin. Wind turbines bring in most of the money, Rs 14,040 crore, 82 per cent of FY26 segment revenue, at a margin tied to steel prices, the rupee and customer bargaining. Maintenance, OMS (operations and maintenance services), is smaller but most profitable: Rs 2,484 crore, 15 per cent of revenue, nearly a third of segment profit. A forging unit adds 3 per cent.
Inside turbines, Suzlon can supply one, or build the whole project, called EPC (engineering, procurement and construction), the group's lowest-margin work. EPC's revenue share rose from 22 per cent in Q1 FY26 to 33 in Q1 FY27, 38 per cent of the order book, with Suzlon targeting 50 by FY28.
Where the margin went
Management split the 3.8-point fall into four parts
| Reason | Margin lost (percentage points) | Likely to last? |
|---|---|---|
| Customer and scope mix | 1.5 to 1.8 | Yes, as EPC grows |
| Suzlon 2.0 costs | About 1.0 | No, one-time |
| Segment mix | About 0.5 | Yes, for now |
| Currency and commodity prices | About 0.5 | Can reverse |
The biggest reason: who Suzlon sells to. Public, commercial and industrial buyers wanting whole projects make up two-thirds of the order book. This wider scope means thinner margin: the turbine segment's contribution margin (what's left after direct costs) fell from 26.9 to 21.2 per cent in a year. The rest: one-time Suzlon 2.0 branding costs, a slower maintenance mix, and costlier inputs from the West Asia crisis.
Suzlon did not cut prices. Average realisation rose to about Rs 5.9 crore per MW from Rs 5.7 crore a year ago, and excluding one-time items, management puts the underlying margin at 16.5-17 per cent.
Why the market pays more for Inox Wind
Suzlon's closest rival, Inox Wind, is shifting toward plain equipment supply, up to 75 per cent of its order book, and guiding for a 20-22 per cent EBITDA margin. The market rewards this with 24 times trailing earnings against Suzlon's 15, though Inox's own margin fell to 18.7 per cent in Q1 FY27.
Going forward
- A rule that blunts Chinese competition. China's Envision undercuts prices 10-15 per cent with cheaper local parts. Since July 2025, ALMM norms (Approved List of Models and Manufacturers) require turbines sold in India to source five key parts, about two-thirds of cost, from Indian factories; Indian makers' installation share rose from 31 per cent in FY24 to 49 in FY26. Suzlon, over 80 per cent India-made, gains almost for free, though it helps Inox, Adani and JSW too, and Envision is localising to compete.
- Suzlon 2.0. Management wants Suzlon doing more per project: a bigger 5 MW turbine, exports from next year, and later solar and battery storage. The most promising piece is repowering, swapping old turbines on India's best sites for modern ones; Suzlon has won its first three such orders and sees a 25 GW opportunity. Targets: 40 per cent market share and 10 GW of annual sales by FY31, up from 23 today, with margins back near 17 per cent if commodities ease.
- The steady business inside a cyclical one. Turbine orders swing with policy and steel costs; maintenance doesn't. A turbine needs servicing for 20-25 years; Suzlon services about 15.7 GW of it, raising fees 4-5 per cent a year with most renewing, needs no factories, earns the group's best margin, and carried Suzlon through its debt crisis. Its revenue share is shrinking, not the business: maintenance grew 12 per cent in FY26 against turbines' 65, so its share fell from about 20 to 15 per cent. About 3,900 MW awaits installation and will join the service fleet once commissioned, so maintenance should settle into a steady share of a larger business as turbine growth normalises.
The concerns
The biggest risk doesn't show up in the margin: full projects tie up money longer, since customers hold back 5-10 per cent of payment until completion; operating cash flow was negative, about Rs 200 crore, in H1 FY27. Management calls this seasonal, holding net cash of about Rs 2,300 crore, but a lower margin works only if cash arrives on time, and cash stuck in projects is a problem.
The trade-off: Suzlon is giving up margin for a larger share of each project and market, which can mean more profit but needs more capital and risk, as cash flow and return on capital will show. Competition is getting tougher too, with Adani and JSW expanding fast on guaranteed demand from their own power projects.
The bottom line
Suzlon's falling margin is mostly a decision, not a breakdown: prices held, about a quarter of the drop is one-time, and the rest comes from bigger projects and turbines outgrowing maintenance.
That doesn't make it a good decision, and the market pays less for Suzlon's earnings than for Inox's. Yet Suzlon's strengths are real: a rule blunting its strongest rival, two years of orders, and a maintenance business growing with every turbine sold.
Watch five numbers each quarter: operating cash flow, absolute EBITDA, commissioning against deliveries, maintenance revenue growth and the EPC share of the order book.
Also read: Financial leverage explained: When debt turns against you
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