Anand Rathi predicts 31% upside potential in Sterling & Wilson, initiates coverage

Seeing Sterling and Wilson Renewable Energy (S&W) well set to capitalise on growing opportunities, domestic brokerage firm Anand Rathi has initiated coverage on the company with a buy rating and a target price of Rs 870.

The optimism on the stock comes from its strong order book, and Reliance Industries’ renewable energy (RE) plans to offer multi-year opportunities.

"Sterling & Wilson is a pure-play global solar EPC and O&M service provider. We model solar EPC orders of Rs 496 bn over FY25-27 across markets,” said Anand Rathi in its report.


The solar EPC orders modeled at Rs 49,600 crore over FY25-27 are primarily driven by domestic and international orders of Rs 26,800 crore, new orders of Rs 9,350 crore from Reliance Industries for solar and battery storage and a Nigerian order of Rs 13,430 crore, which is close to be signed as final terms have been negotiated.

Additionally, RIL plans to enable installing 100GW of RE generation capacity by 2030 as it targets net-zero goals by 2035. RE capacity will be predominantly solar and battery storage.


This could offer overall EPC opportunities of Rs 1.1 lakh crore with Rs 3,000 crore over FY26-31 for S&W (assuming a 50% share) for outsourced work, besides O&M services of Rs 2,400 crore, according to analysts at Anand Rathi.

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However, adverse government policy, slower-than-expected project completion and keen competition dampening profitability have been listed as the key risks to the growth of the company.

Globally, renewable energy capacity added in CY23 was a record 507GW, up 50% y/y. The International Energy Agency estimates 3,178GW are likely to be added over CY24-28. In India, capacity is likely to be 500GW by 2030 (vs. 192GW at end -FY24), benefiting EPC companies.

Shares of Sterling & Wilson were trading 1% higher at Rs 669.40 on BSE around 1:30 pm on Friday.

(Disclaimer: Recommendx`ations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)