Swelect Energy Systems Ltd Q2FY26 – From UPS Past to Solar Sass: 84% Profit Jump but Only 1% ROE, Kyun Bhai Kyun?

1. At a Glance

Swelect Energy Systems Ltd (NSE: SWELECTES), that one Chennai-based company your solar friend keeps bragging about, just reported a spicy Q2FY26 with aProfit After Taxof ₹15.2 crore on ₹139 crore revenue. That’s an84% YoY profit surgeeven though sales dipped 30%. Who knew sunlight could power profits this fast?

At ₹710 per share, this ₹1,078 crore market-cap company is trading at a P/E of 31.9 and a P/B of 1.21. ROCE is a modest 5.06%, while ROE is so low (0.58%) that even a savings account gives more. Debt is ₹666 crore, with a manageable debt-to-equity ratio of 0.75.

In short — the company looks like a hard-working engineer with a fat EMI: solid projects, decent revenue, but all the money goes into paying loans. Yet, the stock’s 26% 6-month return proves the market is betting that this solar story’s next season will be even brighter.

Now, let’s see how this former UPS-maker turned renewable energy guru is charging up its investors.

2. Introduction

Once upon a time, Swelect Energy Systems made uninterruptible power supplies under the “Numeric” brand. Today, they’re trying tobethe power supply. After selling off Numeric, they jumped headfirst into solar panels, inverters, hybrid systems, and all things “renewable.”

From Tamil Nadu rooftops to industrial solar parks, Swelect has positioned itself as a full-stack solar player — manufacturing modules, developing IPPs (Independent Power Producers), and offering EPC and O&M services. It’s like if your friendly neighborhood electrician suddenly started building power plants.

But here’s the twist: while the sunlight is free, making money from it clearly isn’t. Despite impressive operational progress and 1GW module capacity, the company’s profitability ratios are still sleepwalking. Maybe all the profits are onsolar siesta.

Still, Q2FY26 was a positive shocker: PAT up 84.3%, even with a 29.7% drop in revenue. How? Likely due to higher-margin projects, lower costs, and maybe some delayed sunshine billing magic. The boardroom, meanwhile, is busy reshuffling—new CEO Dr. Arulkumar Shanmugasundaram has taken over from veteran R. Chellappan, who now sits as Vice-Chairman. A generational shift of power, literally.

3. Business Model – WTF Do They Even Do?

Swelect’s business is basically an all-you-can-eat solar buffet:

They manufacturesolar modules(1 GW capacity),mounting structures,energy storage systems, and all the small but vital BoS components like charge controllers and junction boxes. They also build, operate, and maintain solar power plants — whether for themselves (IPP model) or for industrial customers (EPC/rooftop projects).

Their portfolio includes ~113 MW of solar capacity and 140 MW renewable overall, split between Swelect and seven SPVs such as Clean, Renewable, Sun, Green, Taiyo, RE, and Noel — names that sound like rejected startup ideas but actually host megawatts of solar muscle.

They even offerOpen Access power, selling clean energy to corporates through long-term PPAs (10–25 years) with clients like SECI, TANGEDCO, CESC, AAI, and Hatsun Agro.

So, what’s the catch? Margins swing harder than a pendulum. Capital-intensive IPP assets mean depreciation and interest eat profits faster than the sun sets.

In short, Swelect is trying to be India’s mini-Adani Green, without the Adani surname or the infinite debt appetite.

4. Financials Overview

Annualised EPS = ₹ 10.01 × 4 = ₹ 40.04At CMP ₹ 710,P/E ≈ 17.7×.

Despite falling revenue, profit jumped thanks to improved margins and disciplined expense control. Basically, Swelect made more money by doing less work — every MBA’s dream.

5. Valuation Discussion – Fair Value Range (Educational Only)

Method 1: P/E ApproachAnnualised EPS = ₹ 40.0.Industry P/E = 47.5.Swelect’s P/E = 17.7.If valued at industry P/E range (25–35 ×),→ Fair Value Range = ₹ 1,000 – ₹ 1,400.

Method 2: EV/EBITDA ApproachEV = ₹ 1,539 cr, EBITDA =