Sterling and Wilson Renewable Energy’s Total Income Up by 11.5% YoY in Q3 FY 2022

Sterling and Wilson Renewable Energy (formerly Sterling and Wilson Solar), the solar engineering and construction arm of the Shapoorji Pallonji Group, recorded a total income of ₹15.02 billion (~$198.62 million) in the third quarter (Q3) of the financial year (FY) 2022. This represents an 11.5% year-over-year (YoY) increase compared to a total income of ₹13.47 billion (~$178.11 million) in Q3 FY 2021.

However, the company registered a net loss of ₹4.287 billion (~$56.66 million) in Q3 FY 2022 compared to a profit of ₹224.5 million (~$2.96 million) in the same period last year.

Its gross margin also declined to 0.7% in Q3 FY 2022 from 7.2% in Q3 FY 2021. The decline was due to the price increase of modules, commodities, freight, and related execution costs coupled with liquidated damages settled or under discussion to settle.

The company has noted that there will be no further impact on the results beyond December 31, 2021, on the settlement of liquidated damages of certain past and existing projects, old receivables, direct and indirect tax litigations, and certain legal and regulatory matters per the indemnity agreement.


Key input prices of have slightly softened in recent months

Image credit: Sterling and Wilson Renewable Energy

In the first nine months (9M) of FY22, its total income stood at ₹41.99 billion (~$554.67 million), a 9.84% YoY increase compared to ₹38.23 billion (~$504.91 million) in 9M FY 2021.

Revenue increased by 11% in 9M FY22 to ₹41.28 billion (~$ 550.46 million).

Its profit turned negative in 9M FY 2022 to a loss of ₹7.89 billion (~$104.24 million) from a plus of ₹547.6 million (~$7.23 million) in the same period last year.

The company said the construction activity at their various sites witnessed a slowdown that led to an increased construction cost, including an increase in module and commodity costs due to the global pandemic. The gross margins saw an impact during the 9M period due to the cost of the liquidated damages, the same as during the quarterly period.

Sterling and Wilson intend to target extensive solar engineering, procurement, and construction (EPC) markets like the U.S., Europe, India, and Australia. The company also plans to focus on third-party operation and maintenance (O&M) in international markets through organic and inorganic routes.

The company expects that opportunity for battery energy storage systems (BESS) and solar plus storage projects to be doubled in the next four years to $12 billion annually.

Earlier this month, Reliance New Energy Solar Limited, the green energy arm of Reliance Industries, completed the 40% stake acquisition in Sterling and Wilson Renewable Energy Limited. Reliance acquired the stake through a primary investment, secondary purchase, and an open offer.

In Q2 FY 2022, Sterling and Wilson Solar recorded revenue of ₹14.38 billion (~$193.24 million), a 20% increase from the ₹11.95 billion (~$161.12 million) in the previous quarter. However, its profitability was impacted due to the challenging environment across the entire solar industry value chain.