Sterling and Wilson Renewable Energy (SWSOLAR) Q1 24/25 earnings summary

Executive summary

• Achieved 78% year-over-year revenue growth in Q1 FY25, driven by strong domestic EPC execution and new orders totaling INR 2,170 crore, including major wins in South Africa and India.

• Returned to profitability at both consolidated and standalone levels, with positive EBITDA, PBT, and PAT for the second consecutive quarter.

• Order book stands at INR 9,396 crore as of June 2024, with 71% domestic share and execution expected to accelerate from Q2.

• O&M portfolio grew to 8.2 GW as of June 2024, with improved margins and a robust pipeline in India and international markets.

• Board approved unaudited results for Q1 FY25, with unmodified review reports from joint statutory auditors.

Financial highlights

• Q1 FY25 operating revenue at INR 915 crore, up 78% year-over-year, but down 22% sequentially due to seasonal factors and liquidity constraints.

• Gross margin improved to 11.1% in Q1 FY25 from 10.3% in FY24; O&M gross margin boosted by one-off income, with recurring O&M margin at 23%.

• Q1 EBITDA at INR 37 crore (4% margin); Q1 PAT at INR 5 crore, impacted by INR 10 crore non-cash deferred tax asset charge.

• Net debt reduced to INR 97 crore as of June 2024, with net borrowings down by INR 19 crore sequentially; no major debt repayments until Q3 FY25.

• Standalone revenue at INR 885.47 crore, up 131% YoY; standalone net profit at INR 73.59 crore.

Outlook and guidance

• Revenue execution pace to pick up from Q2, with strong H2 expected; confident in achieving INR 8,000 crore+ revenue for FY25.

• Order inflow guidance of INR 8,000 crore for FY25 reaffirmed; unexecuted order value at INR 9,396 crore as of June 2024.

• Long-term outlook includes potential to double revenues in 4 years, with significant upside from Nigeria and Reliance projects.

• Management confident of recoverability of large receivables and remediation costs, supported by legal opinions and indemnity agreements.

• No impairment required on investments in subsidiaries and loans as of June 30, 2024.