Sterling and Wilson Solar Limited

Sterling and Wilson Solar IPO comprises an offer for sale (OFS) of equity shares of face value Re. 1 each by both the promoters aggregating to Rs. 3,125 crore in the price band of Rs. 775 to Rs. 780 per share. Sterling and Wilson Solar Limited is a global pend-to-end solar engineering, procurement and construction solutions provider promoted by Shapoorji Pallonji Group and Khurshed Yazdi Daruvala .

Sterling and Wilson Solar Limited IPO Details

Issue DateTue, Aug 6 – Thu Aug 8,2019
Face ValueRs.1
Issue Offer for Sale of Equity Shares: upto Rs.3,125 Cr
Issue Size (Rs. Cr)Rs.3,125 Cr
Price BandRs.775 – 780
Bid Lot19 Equity Shares 
Issue Struc : 
QIB75% of the offer 
NIB15% of the offer 
Retail10% of the offer – 4,032,258 Shares-Rs.312.5  Cr
GCBRLMsAxis Capital, ICICI Securities, Credit Suisse Securities etc.  
BRLMsIndusind Bank, Yes Securities
RegistrarLink Intime India Pvt. Ltd.

About Sterling and Wilson Solar Limited

  • Sterling and Wilson Solar Limited is a global pure-play, end-to-end solar engineering, procurement and construction (“EPC”) solutions provider.
  • Sterling and Wilson Solar (SWSL) is promoted by Shapoorji Pallonji Group and Khurshed Yazdi Daruvala
  • SWSL is the world’s largest solar EPC solutions provider in 2018 based on annual installations of utility-scale photovoltaic (“PV”) systems of more than five mega-watt peak (“MWp”), according to IHS Markit.
  • Sterling and Wilson Solar Limited provides EPC services primarilyfor utility-scale solar power projects with a focus on project design and engineering and manage all aspects of project execution from conceptualizing to commissioning. We also provide operations and maintenance (“O&M”) services, including for projects constructed by third-parties.
  • The company commenced operations in 2011 as the Solar EPC Division of SWSL and demerged from SWPL with effect from April 1, 2017.
  • SWSL Over a span of seven years has became the largest solar EPC solutions provider in each of India, Africa and the Middle East according to IHS Markit in 2018.
  • Sterling and Wilson Solar Limited and currently have a presence across 26 countries. As of March 31, 2019, it had 205 commissioned and contracted solar power projects with an aggregate capacity of 6,870.12 MW.
  • Sterling and Wilson Solar Limited order book, was Rs. 38,315.77 million as of March 31, 2019.

Sterling and Wilson Solar Limited : Financials

Particulars/ Year (Rs. In crore)20192018
Revenue from Operations8,240.416,871.71
Revenue Growth (%)19.92%
EBITDA as stated851.63550.46
EBITDA (%)10.33%8.01%
Profit Before Tax759.17528.68
Profit after Tax638.23450.54
Net Profit as % to Revenue7.75%6.56%
Equity Share Capital16.0416.04
Reserves841.01196.59
Net worth1,022.90383.5
EPS (Rs.)39.8529.97
RONW(%)62.00%118.00%
Net Asset Value (Rs.)63.7925.42
Debt to Equity ratio2.160.46
Face Value1 
IPO Price780
EPS (Rs.)39.8
PE19.60

Sterling and Wilson Solar Limited IPO: Assessment

  • Sterling and Wilson Solar Limited offers a complete range of customized solutions for solar power projects. The company is is promoted by Shapoorji Pallonji Group and Khurshed Yazdi Daruvala
  • Sterling and Wilson Solar Limited follows an asset-light business model, resulting in higher RoE ( 62%) and low working capital needs.
  • International accounts stand at about 70% which exposes the EPC firm to risks and make it vulnerable to FE fluctuations.
  • Due to continuous pressure on tariffs in renewable energy sector, profitability of the industry stakeholders like EPC may get compressed.
  • Sterling and Wilson Solar (SWSL), raised about Rs 1,406 crore by selling shares to 18 anchor investors which include Nomura India Investment Fund, Schroder International, and Abu Dhabi Investment Authority, Reliance Mutual Fund, Eastspring, Keysquare, Carmignac Gestion, Massachusetts Institute of Technology, Fidelity, ICICI Prudential Life, HSBC Global, UPS Group Trust, Neptune, IIFL AIF etc.
  • The company’s profit in FY19 increased by 41.6% (YoY) to Rs 638 crore and revenue was up 19.9 percent to Rs 8,240 crore.
  • The solar projects have advantage over other EPC orders as they have short execution cycles.
  • The shares reserved for retail stand at 10% only.
  • Despite presence in a fast growing renewable energy market, goo promoters, decent performance, excellent anchor investor response etc. Iam not not inclined at this stage to consider investment in this IPO due to weak investor sentiments towards infra sector, general weakness in market, considerable EPC exposure in Foreign countries and aggressive pricing. I would find myself more comfortable with holding engineering giants like L&T than this company which is not fully tested on the bourses. In case of very high QIB interest on back of clean energy prospects or group credentials which is normally evident only on last day, I may put 1-2 retail applications.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.