The brokerage house Nuvama has given a ‘Buy’ rating to this renewable energy sector stock. With improving margins, a strong order pipeline, and better balance sheet visibility, this stock is now drawing attention for its potential upside. 

The stock in focus here is Sterling and Wilson Renewable Energy. Nuvama has maintained a ‘Buy’ rating on the stock and set a target price of Rs 300. This implies nearly 41% upside from current levels.

Let’s take a look at the key reasons why the brokerage house is bullish on the stock and what is the rationale behind it – 

Nuvama on Sterling and Wilson Renewable Energy: Growth visibility improves, but execution remains key

The brokerage in its report noted that the company has guided for steady growth ahead. “Sterling and Wilson Renewable guided for 15% growth in revenue/order book for FY27,” noted Nuvama in its report.

Furthermore, the company is also working with a strong pipeline. The report highlighted that “order inflow (OI) was strong on robust 31GW bid pipeline even sans RIL, Nigeria.” 

ALSO READ

This means that the company has a large number of projects it is bidding for, even without factoring in potential large orders like those from Reliance Industries.

The current unexecuted order book stands at around Rs 11,800 crore and is expected to grow to Rs 14,000 crore by the end of FY27. 

Nuvama on Sterling and Wilson Renewable Energy: Margins improve even as revenue dips

One of the key factors in focus of the quarter was the margin performance. While revenue came in lower due to delays, profitability surprised positively.

According to the brokerage report, “Q4 EBITDA/PAT beat on better margins and high other income; revenue missed our estimates on deferred supplies owing to price volatility.” 

Putting it simple, the sales were lower than expected, but profits were stronger due to cost control and other income support.

For the quarter, revenue stood at around Rs 1,950 crore, down on a year-on-year basis. However, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) came in significantly higher than expected at around Rs 150 crore. Net profit (Profit After Tax) also showed a sharp jump.

Furthermore, the margins of the company improved due to lower input costs and reduced expenses. Gross margin stood at 11.5%, while EBITDA margin came in at 7.5%. This shows an improvement compared to last year.

Nuvama on Sterling and Wilson Renewable Energy: Balance sheet strengthens, debt reduces

Another positive factor highlighted in the report is the improvement in the company’s financial position. 

According to the brokerage report, “Q4 net debt fell QoQ; balance sheet was strong.”

The company’s net debt reduced to around Rs 630 crore. It has also secured additional credit lines of about Rs 2,800 crore.

ALSO READ

Nuvama on Sterling and Wilson Renewable Energy: New segments like battery storage add growth layer

The company is also expanding into newer areas such as battery energy storage systems (BESS). As per the Nuvama report, “Sterling and Wilson Renewable expects around 20% of new orders from BESS.”

This is significant because battery storage is becoming an important part of renewable energy infrastructure. It helps store power and manage supply fluctuations.

Diversification into such segments could help the company reduce dependency on traditional EPC (Engineering, Procurement and Construction) projects.

Nuvama on Sterling and Wilson Renewable Energy: Valuation gap keeps the stock attractive

Valuation remains one of the key reasons for the bullish view. Nuvama in its report noted, “Adjusted for RIL order option value of Rs 48/share, PE is compelling at 11x FY28 EPS (Peers: 18x); retain ‘Buy’; target price: Rs 300.”

The brokerage also noted that operational leverage could play a role going forward. “Following a strong FY26 performance, we reckon acceleration to a hockey-stick curve given a strong outlook.” 

Disclaimer: The specific price targets and growth projections mentioned in this report are based on analysis by Nuvama Institutional Equities and are provided for informational purposes only. These do not constitute an offer, solicitation, or a recommendation by Financial Express to buy or sell the security mentioned. Stock investments, particularly in the renewable energy sector, carry inherent market risks and volatility; readers are strongly advised to consult with a SEBI-registered investment advisor before making any financial decisions.

This disclaimer has been generated using AI to support user well-being and responsible content consumption.