Nuvama retains buy rating on Sterling and Wilson with target price of Rs 454

Brokerage house Nuvama is bullish on Sterling and Wilson Renewable Energy (SWREL) as the company has turned the corner in Q1FY24, bagged two domestic orders worth Rs 500 crore in Q1 and anticipates orders worth $1 billion from Nigeria. The research firm believes SWREL is poised for a V-shaped recovery for FY24.

At 2:45 pm on July 17, the stock is trading up 12.5 percent at Rs 324.50.

SWREL reported a 482.3 percent quarter-on-quarter increase in net revenue to Rs 5,150 crore in Q1FY24 driven by a strong order book. However, it reported a negative EBITDA of Rs 372 in Q1FY24 and a 77 percent lower negative EPS of Rs 5.

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Despite a negative EBITDA standing in FY23, Nuvama expects high operational leverage and falling fixed costs to drive SWREL’S EBITDA turnaround by Q3FY24. The brokerage has cut FY24E EBITDA by 43 percent but hiked the FY25E estimates by 13 percent on the back of execution calibration. SWREL expects indemnity receivables worth Rs 400 crore to crystallise in FY24, which shall largely service debt.

The stock has delivered a 23.62 percent return over the past six months and a 11.15 percent return over the past one year.