SWSOLAR - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.3

📊 Core Financials Overview

Profitability

ROE: 11.2% and ROCE: 13.5% are decent, showing moderate capital efficiency.

EPS of ₹13.8 and P/E of 19.3 suggest fair valuation relative to the industry average of 20.6.

PAT declined from ₹92.2 Cr to ₹78.4 Cr QoQ, indicating some margin pressure despite a 6.58% profit variation.

Balance Sheet Health

Debt-to-equity ratio: 0.31 — comfortably low, indicating prudent financial management.

Book Value: ₹129 vs Current Price: ₹267 → P/B ratio ~2.07, which is reasonable for a growth-oriented EPC firm.

No dividend yield, consistent with reinvestment strategy.

Cash Flow & Stability

PEG ratio of 0.34 implies undervaluation relative to expected growth.

RSI at 44.6 and MACD negative suggest weak technical momentum and potential for further consolidation.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 19.3 Fairly valued vs industry PE

P/B Ratio ~2.07 Reasonable for sector

PEG Ratio 0.34 Attractive valuation

Intrinsic Value ~₹240–₹255 Slightly below current price

SWSOLAR appears mildly overvalued, but not excessively so given its growth potential.

☀️ Business Model & Competitive Edge

Sector: Sterling and Wilson Renewable Energy Ltd is a leading solar EPC player, offering design, engineering, procurement, construction, and O&M services.

Strengths

Global presence with projects across 25+ countries

Strong execution capabilities and integrated service model

Low debt and improving profitability

Challenges

Declining institutional interest (DII −2.48%)

Margin pressure and earnings volatility

High dependence on EPC contracts, which are cyclical and margin-sensitive

According to Invest Yadnya, the company’s revenue mix is heavily skewed toward EPC (96%), with only 4% from O&M services, making it vulnerable to project-based fluctuations.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹240–₹255

Near intrinsic value and below 50 DMA (₹278)

RSI and MACD suggest waiting for technical confirmation before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: Fundamentals are improving, and the solar sector has long-term tailwinds.

Accumulate on Dips: Especially near ₹240 for better margin of safety.

Watchlist Triggers

EPS growth and margin expansion

Diversification into annuity-based revenue streams

Institutional accumulation

Sterling and Wilson Renewable Energy is a solar EPC leader with global reach, but its valuation and earnings volatility call for a cautious, price-sensitive approach. You can explore deeper insights on TopStockResearch’s fundamental dashboard.

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