This renewable EPC solution provider stk has zoomed 119% against QIP price

Sterling and Wilson Renewable Energy stock price has rallied 53% as the company's March quarter profit before tax and profit after tax turned positive after nearly 12 quarters

Shares of Sterling and Wilson Renewable Energy (SWREL) hit a new high of Rs 760 as they were locked in the 5-per cent upper circuit on the BSE on Wednesday at 02:42 PM, amid heavy volumes. As many as 4.8 million equity shares, representing 2 per cent of total equity of SWREL, changed hands on the BSE and NSE today.

In the past one, the stock has rallied 53 per cent after the company's March quarter (Q4FY24) profit before tax (PBT) and profit after tax (PAT) turned positive after nearly 12 quarters. The company unexecuted orders worth Rs 8,084 crore in Q4FY24 compared to Rs 4,913 crore in Q4FY23.

SWREL had a strong recovery in financial performance and the company turned Ebitda (earnings before interest, tax, depreciation and amortisation) positive at Rs 54 crore in FY24 backed by robust growth recorded in the domestic engineering, procurement, and construction (EPC) business.

With the past one month's rally, the stock price of SWREL has more-than-doubled, zooming 119 per cent, as against its qualified institutional placement (QIP) issue price of Rs 347 crore. On December 15, 2023, SWREL had raised Rs 1,500 crore through QIP.

The QIP garnered a robust response from both domestic mutual funds and prominent global foreign institutional investors (FIIs).

Meanwhile, according to media report, the Biden administration moved Tuesday to block China’s access to the American market for clean energy technology by doubling duties on solar cells and effectively quadrupling the price of electric vehicles from China.

The new tariffs affect not just electric vehicles (EVs) and solar panels but also parts of their supply chain along with semiconductors, shipping cranes and medical supplies. The administration also is doubling existing tariffs on Chinese solar cells from 25 per cent to 50 per cent. Chinese solar cells represented less than 1 per cent of total US solar cell imports in the first half of 2023, ICICI Securities said in a note.

SWREL provides EPC services for utility-scale solar, floating solar and hybrid & energy storage solutions and has a total portfolio of over ~18 GWp (including projects commissioned and under various stages of construction). SWREL also manages an operation and maintenance (O&M) portfolio of 7.6 GWp solar power projects, including for projects constructed by third parties.

SWREL offers design, detailed engineering, procurement, construction, installation, commissioning and operations & maintenance services under turnkey EPC and BoS (Balance of System) solutions for utility-scale, rooftop and floating solar power projects. The company also offers solar plus storage solutions.

The management said the company’s future growth prospects look promising based on its strong unexecuted order book and business fundamentals continuing to improve. The market opportunity for renewable EPC players is continuing to grow significantly both in India and internationally, and the company is well aligned to capture the growth.

Meanwhile, India Ratings and Research (Ind-Ra) expects the company to improve its Ebitda margin in the near to medium term, as majority of newly secured orders from public sector units are pertaining to balance of supply, wherein the procurement of solar panels is under the scope of project owner. While the company has secured few projects, which have the scope of solar modules, it has fixed the pricing with the solar module supplier and thereby mitigating the risk.

Furthermore, post-acquisition of SWREL by Reliance New Energy Limited, Ind-Ra expects the company to become a preferred EPC and O&M contractor for the net-zero carbon vision of the Reliance group by 2035.