Published on 6/08/2019 2:29:29 PM | Source: Religare Broking Ltd

IPO Note - Sterling and Wilson Solar Ltd By Religare Broking

Posted in IPO Reports| #IPO #Sterling and Wilson Solar Ltd

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About the Company

Sterling and Wilson Solar Ltd. (SWS) is a global pure-play, end-to-end solar engineering, procurement and construction (EPC) solutions provider which commenced its operations in 2011 as a part of the solar EPC division of Sterling and Wilson Pvt. Ltd. (SWPL). The company was later demerged from SWPL in April, 2017. It was the world’s largest solar EPC solutions provider in 2018 based on annual installations of utility-scale photovoltaic systems of more than five mega-watt peak. It provides EPC services primarily for utility-scale solar power projects with a focus on project design and engineering and manage all aspects of project execution from conceptualizing to commissioning. It also provides operations and maintenance (O&M) services, including projects constructed by third-parties. It offers a complete range of customized solutions for solar power projects. Its customers include leading independent power producers (IPP), developers and equity funds. SWS follows a hub and-spoke business model where it manages the complete supply chain from India, including the design and engineering functions. Over the years, it became the largest solar EPC solutions provider in each of India, Africa and the Middle East and has presence in across 26 countries. The export revenue accounts for nearly 69% of the company’s overall revenue and its current order book stands at Rs. 3,832 cr as on end of FY19.


Objects of the Issue

Offer for sale proceeds will go to promoter selling shareholders



According to IHS Markit, the annual solar PV installations have seen strong CAGR of 21.8% globally, increasing from 31.6 GW in 2012 to 103.0 GW in 2018. This has been the result of increasing cost competitiveness, improving technology and robust government approaches to climate change. Going forward, the total annual solar PV installation is expected to grow at 12.9% CAGR over 2018-21E. Further, the solar PV installation in SWS operating countries are expected to growth at 20% CAGR during the same period.

SWS fundamental track record has been promising with Revenue/EBITDA/ PAT CAGR of 44.4%/50.4%/57.5%. The company is the largest global EPC service provider with strong parentage (Shapoorji Pallonji). The company works on an asset-light business model under which its customers are responsible for sourcing and acquiring real estate while the company leases equipment required for the operations. Going forward, given the increased focus by the governments across the globe towards cleaner energy, the outlook for the Solar industry remains promising. SWS being the largest EPC player is likely to benefit from positive industry prospects. Further, the company’s increased focus on enhancing its leadership position through overseas expansion and increase in operational efficiency would augur well for the company’s growth prospects going forward. The key risk for the company include, high dependence on few customers and negative operating cash flow. On the valuation front, at upper price band of Rs. 780, SWS is valued at 19.6x on FY19 EPS. 


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