SWSOLAR - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.7
| Stock Code | SWSOLAR | Market Cap | 4,899 Cr. | Current Price | 210 ₹ | High / Low | 451 ₹ |
| Stock P/E | 16.4 | Book Value | 20.1 ₹ | Dividend Yield | 0.00 % | ROCE | 13.5 % |
| ROE | 11.2 % | Face Value | 1.00 ₹ | DMA 50 | 218 ₹ | DMA 200 | 274 ₹ |
| Chg in FII Hold | -1.30 % | Chg in DII Hold | -1.84 % | PAT Qtr | 73.1 Cr. | PAT Prev Qtr | 54.9 Cr. |
| RSI | 48.8 | MACD | -4.46 | Volume | 1,82,98,655 | Avg Vol 1Wk | 57,38,137 |
| Low price | 192 ₹ | High price | 451 ₹ | PEG Ratio | 0.29 | Debt to equity | 2.60 |
| 52w Index | 6.99 % | Qtr Profit Var | -5.65 % | EPS | -100 ₹ | Industry PE | 17.6 |
📊 Sterling & Wilson Solar (SWSOLAR) shows weak fundamentals for long-term compounding. While the valuation appears fair (P/E 16.4 vs industry 17.6), profitability metrics are modest with ROE (11.2%) and ROCE (13.5%) below ideal compounding levels. Debt-to-equity is very high (2.60), raising financial risk. Dividend yield is 0%, offering no income support. EPS is negative (-100 ₹), reflecting poor earnings quality. Quarterly PAT declined (-5.65%), highlighting volatility. Technicals show consolidation (RSI 48.8, MACD negative), suggesting limited near-term momentum.
💡 Ideal Entry Zone: Between 180 ₹ – 195 ₹, closer to the 52-week low, offering margin of safety.
📈 Exit / Holding Strategy: If already holding, consider exiting near 240 ₹ – 260 ₹ resistance zone. Long-term holding is not recommended unless debt reduces significantly and ROE improves above 15%. Current metrics suggest better opportunities in peers with stronger balance sheets and earnings visibility.
Positive
- ✅ Fair valuation (P/E 16.4 vs industry 17.6)
- ✅ Quarterly PAT improvement (73.1 Cr. vs 54.9 Cr.) despite sequential decline
- ✅ Large market cap (4,899 Cr.) ensures liquidity and visibility
Limitation
- ⚠️ High debt-to-equity (2.60) increases financial risk
- ⚠️ Negative EPS (-100 ₹) reflects poor earnings quality
- ⚠️ Weak ROE (11.2%) and ROCE (13.5%) below compounding standards
- ⚠️ No dividend yield (0%) offers no income support
Company Negative News
- 📉 FII holding decreased (-1.30%), showing reduced foreign investor confidence
- 📉 DII holding decreased (-1.84%), showing reduced domestic institutional support
- 📉 Quarterly profit variation (-5.65%) highlights earnings volatility
Company Positive News
- 📈 Sequential PAT growth compared to previous quarter (73.1 Cr. vs 54.9 Cr.)
Industry
- 🏭 Industry P/E at 17.6 suggests sector is moderately valued
- 🏭 Renewable energy sector benefits from government incentives and global clean energy demand
Conclusion
🔎 SWSOLAR is a weak candidate for long-term investment given high debt, negative EPS, and earnings volatility. Long-term investors should wait for entry near 180 ₹ – 195 ₹ for margin of safety. Existing holders may consider exiting near 240 ₹ – 260 ₹ unless profitability improves and debt reduces. The stock remains a speculative play in renewable energy, but stronger peers may offer better compounding potential.
Would you like me to also prepare a peer benchmarking overlay comparing SWSOLAR with other renewable energy players (like Adani Green, Tata Power, or JSW Energy) to highlight relative valuation and financial strength?