Subscribe to Sterling and Wilson Solar: Mehta Equities

Sterling and Wilson Solar Ltd (SWSL) is a Mumbai based end-to-end solar Engineering, Procurement and Construction (“EPC”) solutions provider servicing globally. SWSL is focused on utility-scale solar power projects and manages the solar projects from conceptualizing to commissioning. It provides operations and maintenance (O&M) services for the 3rd party projects as well. According to IHS Markit Ltd, SWSL was the world's largest solar EPC solutions provider in 2018 based on annual installations of utility-scale PV systems of more than 5 mega-watt peak. Currently, it has a wide presence across 26 countries with 138 employees in the design and engineering team.

Valuation and Outlook

We believe Sterling and Wilson Solar is well placed EPC player in a niche high-growth solar industry with high entry barriers and diverse global presence. We like the way SWSL operates business with asset-light model, under which their customers are responsible for sourcing and acquiring real estate while they typically lease equipment required for their operations. Addition to its business efficiency, SWSL has a strong parentage with a globally renowned brand, Shapoorji Pallonji which acts as strong catalyst for long term business association. On valuation parse at the upper end of the issue price Rs 780 SWSL commands Rs 12508 Cr market cap with P/E of 19x and P/BV of 12x times on its FY19 financials, which is relatively above market expectation considering the current market environment, while considering all the above optimistic factors for investment, SWSL’s prospects look promising for the long term.

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