Mehabe score: 3 G Factor: 3 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 4.
Description
Sterling and Wilson Solar Ltd is one of the leading end-to-end solar engineering, procurement and construction (EPC) solutions provider globally and is also engaged in the operation and maintenance (O&M) of solar power projects. The company is backed by strong parentage of the Shapoorji Pallonji Group (SP Group).[1]Site:SWSOLARMain Symbol:SWSOLAR
Stock trades at 433.0, above its 50dma 330.37. It also trades above its 200dma 285.1. The stock remains bullish on techicals
The 52 week high is at 442.50 and the 52week low is at 183.50
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– has a good return on equity (ROE) track record: 3 Years ROE 28.24%
-Debtor days have improved from 92.69 to 60.98 days.
Weakness
– Stock is trading at 10.50 times its book value
– has low interest coverage ratio.
-Promoters have pledged 60.89% of their holding.
-‘s cost of borrowing seems high
Competition
– The industry trades at a mean P/E of 19.1x. Sterling & Wils. trades at the industry’s max P/E of 19.13x. SWSOLAR trades at a P/E of x
– Industry’s mean G-Factor is 2.8 while the mean Piotski score is 6.0. SWSOLAR has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 4.1%. The max 1- month return was given by ATV Projects: a return of 11.08 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 1195.0 cr compared to Rs 1068.0 cr for period ended Jun 2020, a rise of 11.9%
Company reported negative operating profit of Rs -104.0 cr for period ended Jun 2021. For same period last year, operating profit was 17.0
The EPS for Jun 2021 was Rs -4.75 compared to Rs -21.63 for previous quarter ended Mar 2021 and Rs 1.02 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 5208.0 cr for period ended TTM vis-vis sales of Rs 5081.0 cr for the period ended Mar 2021, a growth of 2.4%. The 3 year sales cagr stood at -14.2%.
Operating margins shrank to -10.0% for period ended TTM vis-vis -7.0% for period ended Mar 2021, contraction of 300.0 bps.
Net Profit reported at Rs -378.0 cr for period ended TTM vis-vis sales of Rs -285.0 cr for the period ended Mar 2021, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -33.0% compared to 28.0% over the last 3 Years. – The stock has given a return of 99% on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is -4% vis-vis a compounded sales growth of -10% over the last 3 Years. – The compounded profit growth on a TTM basis is -236% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has risen for the period ended Sep 2021. The Sep 2021 fii holding stood at 8.56% vis-vis 6.1% for Jun 2021 – Public shareholding has remained largely constant. The Sep 2021 public holding stood at 18.46% vis-vis 20.35% for Jun 2021
Conclusion
– has reduced debt.
– has a good return on equity (ROE) track record: 3 Years ROE 28.24%
-Debtor days have improved from 92.69 to 60.98 days. – Stock is trading at 10.50 times its book value
– has low interest coverage ratio.
-Promoters have pledged 60.89% of their holding.
-‘s cost of borrowing seems high
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 330.37 and is trading at 433.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
