01 — At a Glance
The Company That Refuses to Be Simple
- 52-Week High / Low₹349 / ₹165
- Q3 FY26 Revenue₹2,092 Cr
- 9M FY26 Revenue₹5,602 Cr
- Q3 FY26 PAT₹1.55 Cr
- TTM EPS-₹16.64
- Book Value₹20.1
- Price to Book8.72x
- Order Book (9M25)₹10,413 Cr
- Total Debt (9M25)₹1,194 Cr
- Interest Coverage1.38x
The Situation Report: Sterling & Wilson Solar achieved its highest-ever Q3 revenue of ₹2,092 crore. But then the company decided to record a ₹2,638 crore impairment charge related to legacy business issues. In financial speak: “We’re making money on operations but let’s lose a nuclear reactor full of cash on balance sheet adjustments.” The company’s rating downgrade to IVR BBB+/Negative in December (from BBB+/Stable) suggests credit rating agencies found this amusing too. Stock down -37.6% in 6 months. Down -25.6% YoY. The Reliance backing is the only reason the stock hasn’t been banned from the exchange.
02 — Introduction
When Your Company Becomes a Financial Thriller Novel
Sterling and Wilson Solar is the solar engineering, procurement, and construction (EPC) company backed by Reliance Industries. Or more accurately, it’s the company that got acquired by Reliance, inherited all the previous owners’ litigation nightmares, and is now slowly digesting them like a python that swallowed a goat.
The business is simple: Build solar power plants end-to-end for global utilities, private power producers, and government entities. Do it in 22+ countries. Maintain a ₹10,000+ crore order book. Sounds like a winner. The problem: This company spent five years losing ₹1.2 billion annually. The kind of losses that make accountants weep silently at their desks. Then in FY25, it turned profitable. Then in Q3 FY26, it recorded a legacy-related impairment that erased three years of profits.
The concall in January 2026 was straightforward: Management raised guidance for FY26 order inflows to ₹11,000 crores, emphasized “multi-year engagement frameworks” with Adani, secured a 1 GW+ order book with Adani Green’s Khavda project, and positioned itself as a “disciplined” EPC provider. The subtext: We’re not crazy, we’ve just had a lot of crazy things happen to us.
Let’s dissect this solar company that’s more dramatic than a Bollywood climax.
Management’s Opening Gambit: “This is where we’ve learnt from the past,” the CEO said on the January concall, referring to the legacy liabilities. That’s what you say when your company’s past liabilities have a PhD in creating chaos and you’ve finally accepted they exist.
03 — Business Model: Building Suns For Rupees
They Construct Solar Power Plants. The Drama is Optional.
Sterling & Wilson Solar operates in two segments: EPC (Engineering, Procurement, Construction) and O&M (Operations & Maintenance). The EPC business is where 96% of revenues come from. They take a contract to build a solar power plant, they engineer it, they source the panels, they construct it, they hand it over. Done. Repeat for 25 countries.
The O&M business is the slower, steadier cousin: manage and maintain solar plants after they’re built, for either their own projects or third parties. It’s like being a long-term relationship versus one-night stands. Less glamorous, more stable.
The company’s portfolio includes 22.6 GWp of EPC projects (which is honestly hard to visualize) and manages 10 GWp of O&M projects. In India, they control ~84% of their order book. Internationally, projects are now in South Africa, Europe, and other markets where they’ve learned to “only work as per our risk appetite” — management code for: We stopped accepting terrible contract terms because our CFO was having stress-induced heart palpitations.
EPC Share96%Of Revenue
Domestic80%Of EPC FY25
O&M Portfolio10 GWpGlobal Capacity
Risk Note: The company has moved module price risk to customers (until they issue NTP — Notice To Proceed). This is strategic capital preservation. Previously, Sterling bore the module price risk from contract date. That was equivalent to wrestling a python during monsoon season. Now the customer wraps. Much better.
💬 Quick thought: Would you trust this company to build a solar plant in your backyard? Or would you demand a Reliance guarantee in writing? Drop your gut response.
04 — Financials Overview
Q3 FY26: The Numbers That Confuse Auditors
Result type: Quarterly Results (9M = 9 Months to Dec 31, 2025) | Q3 EPS: ₹-0.12 (annualised ₹-0.48, impacted by exceptional items) | Exceptional: ₹2,638 Cr impairment
| Metric (₹ Mn) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 209,221 | 183,720 | 174,860 | +13.9% | +19.6% |
| Operating Profit (EBITDA) | 6,695 | 5,433 | 3,920 | +23.2% | +70.9% |
| EBITDA Margin % | 3.20% | 2.96% | 2.24% | +24 bps | +96 bps |
| PAT (Exceptional) | 155 | 1,714 | -47,762 | -90.9% | N/A |
| PAT (Normalised) | 66 | 70 | 39 | -5.7% | +69% |
| EPS Q3 (₹) | -0.12 | 0.64 | -20.26 | N/A | N/A |
The Exceptional Situation Explained: Q3 FY26 shows consolidated PAT loss of ₹437.38 crore (9 months) due to ₹2,638 crore impairment related to legacy asset-valuation matters. This is a one-time balance-sheet adjustment. Normalised operational profit (EBITDA) is solid at ₹105 crore in Q3, up from ₹62 crore Q2. The company is operationally firing. The balance sheet is absorbing legacy pain. Both can be true.
05 — Valuation: Fair Value Range
How Do You Value a Company with a Lawsuit Timebomb?
Method 1: P/E Based (With Caveats)
TTM EPS = ₹-16.64 (negative, thanks to impairments). Forward EPS estimates difficult given litigation. Using normalised FY25 EPS of ₹3.49: P/E of 19.4x implies CMP of ₹67.6 fair on normalised basis. But the negative TTM EPS means the market is pricing in continued pain.
Range (Normalised): ₹70 – ₹110
Method 2: EV/EBITDA Based (With Order Book Visibility)
FY25 EBITDA = ₹247 crore (very low margin, 3.9%). Current EV/EBITDA = 11.4x. Given order book of ₹10,413 crore and improving execution, FY26-27 EBITDA could reach ₹500-600 crore range (5-6% margin target). At 10x EV/EBITDA:
EV = ₹5,000-6,000 cr → Less net debt ₹738 cr → Equity EV ₹4,300-5,300 cr
Range: ₹120 – ₹185
Method 3: DCF Based (Risky Given History)
FY25 Operating CF: ₹38 crore (minimal). Growing at 15% annually for 5 years to ₹78 crore by FY30. Terminal growth: 3%. WACC: 10%.
→ PV of 5-year FCFs at 10%: ~₹280 cr
→ Terminal Value (3% growth / 7% cap rate): ~₹1,200 cr
→ Total EV: ~₹1,500 cr (with high uncertainty)
Range (Very Wide): ₹60 – ₹150
⚠️ EduInvesting Fair Value Range: ₹100 – ₹180. Current price ₹176 is in the upper end of our range. This valuation assumes: (1) legacy litigation resolves with no further material surprises, (2) order book executes at 5%+ EBITDA margins, (3) Reliance remains supportive. If litigation crystallises further or margins compress, downside could test ₹80. This is an educational analysis, not investment advice.
06 — What’s Cooking: News, Orders, Drama
Multi-Year Contracts and Multi-Year Lawsuits
