Sterling and Wilson Renewable Energy (SWREL) narrowed its consolidated loss in the third quarter of FY24 at ₹63.7 crore compared to ₹101.2 crore year ago, and revenue rose 43 per cent on year to ₹582.9 crore on improved order executions.

The company, which is 40 per cent owned by Reliance Industries, won five orders during the quarter under review of ₹2,400 crore taking its total order backlog to ₹8,750 crore, executable in the next 12-18 months.

In the first nine months of FY24, it has received 11 orders worth ₹5,527 crore.

The quarter also saw the company repaying all its overdue debts helped by the ₹1,500 crore it raised through an institutional placement of shares. The QIP issuance received good response from domestic mutual funds and global institutions. It also received inflows from promoter indemnity payments and customer settlements that were used to bring down its debt levels.

Around ₹1,800-crore worth of debts have been repaid and projects are in a negative working capital cycle, Global CEO Amit Jain said in an analyst call. It has a net debt of around Rs 377 crore now.

“We are confident to sustain our growth momentum as a lot of our marquee customers are approaching us once again as our balance sheet issues are resolved and the company is nearly net debt free,” he said.

With the reduced debt and a decrease in overheads, Jain told analysts that the company was likely to be profitable in the current quarter itself.

While it posted a net profit on a standalone basis, at the consolidated level its reported a positive operating profit at₹ 10 crore and an operating margin of 1.7 per cent.

Order inflows

During the quarter SWREL emerged as the lowest bidder for a large floating solar module project in India. It got its first international order in three years from Italian energy major ENI group for a project in Spain worth 112 million euros. Through this project, it has achieved a breakthrough in the European solar market.

The company said that revenue was subdued on a sequential basis as it faced challenges in project execution “due to tight financial conditions.”  It expects the pace of executions to pick up from the current quarter with liquidity back in the system.

The company has most of its orders in the Indian market and there is a pipeline of 40GW of orders, Jain said. He added that with the deleveraged balance sheet the company was making headway in being the preferred EPC contractor of choice .

For the last three years the company has steered clear of international orders because of losses suffered in the past. Jain said that it was getting enquiries from the Middle East and Africa. All international orders would be evaluated for risks and their margin profile. “We are cautious about international projects,” he said, adding that there was 8GW of international orders in the pipeline.

In 2022 its subsidiary had signed an agreement with the Nigerian government to set up a solar PV plant in consortium with Sun Africa. This agreement is under negotiation and finalisation of the deal is expected in the current quarter.

Margins

The company’s EPC business contributes the bulk of its revenues, and the margin growth was led by the domestic business.

Domestic EPC margins continue to remain above nineper cent, it said. “Our unexecuted order book which largely comprises domestic projects currently is likely to help sustain gross margins going forward.”

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