Sterling and Wilson Renewable Energy shares drop 8% on low Q4 earnings
Shares of Indian construction engineering company, Sterling and Wilson Renewable Energy, reportedly fell by 7.5% after the firm reported less then stellar earnings for the quarter ending March 2023. Reports cite, company shares were trading 7.1% lower at INR 284.75 (USD 3.46) on the BSE at the start of the trading day.
The firm’s overall revenues tanked 92% on-year to INR 88.43 crore (USD 10.7 million), while its net loss doubled to more than INR 421.11 crore (USD 51.2 million). Company revenue supposedly took a big hit due to a cost increase on certain provisions made, effectively impacting the percentage-of-completion, and leading to a revenue reversal across ongoing procurement, engineering, and construction projects.
Despite this setback however, Sterling and Wilson reported its highest quarterly inflow of orders since the Q1 of FY21.
The company aims to achieve a substantial debt reduction by the fourth financial quarter of 2024, supported by receivables recovery, negative working capital, and indemnity inflows. as of March 31, 2023, Sterling and Wilson’s net debt stood at INR 1,967 crore (USD 239.4 billion).
The firm claims that the O&M made up over 8.9% of its revenue in FY23. While its O&M margins remain impacted from projects that incurred O&M costs, the revenue recognition is yet to commence due to a delay in the final handover.
Sterling and Wilson aims to revert back to 10% - 11% gross margins, supported by nearly 90% of current UOV, which comprises of new orders from all across India. The company further expect that it will likely also achieve an EBITDA profitability by the second fiscal quarter of FY24E.
About Sterling and Wilson Renewable Energy:
Headquartered in India, Sterling and Wilson Renewable Energy offers detailed engineering, design, procurement, installation, construction, maintenance, and commissioning and operation services under a turnkey EPC as well as Balance of System solutions to utility-scale, floating and rooftop solar power projects. In addition, the company also offers solar energy harvesting and storage solutions to clients.
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