Sterling and Wilson IPO - Grey Market, GMP & Reviews

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About Sterling and Wilson Solar Ltd

A business partnership born out of friendship and mutual respect in the 1920s between Shapoorji Mistry Sr. and Mehervan Daruvala, the latter’s company Wilson Electric Works served as an electrical contractor for Shapoorji Pallonji Construction, working on some of India’s biggest commercial and residential projects.

As the relationship blossomed, Wilson Electric Works joined forces with Sterling Investments of the SP Group in the year 1973, to form the engineering behemoth that is Sterling & Wilson.

From being electrical contractors in the 80s to being the subcontinent’s largest MEP and EPC business today, Sterling & Wilson has come a long way.

It has grown in leaps and bounds, from a turnover of ₹2,245 Cr in 2012 to ₹11,061 Cr in 2018.

Starting from delivering large-scale projects in the middle-east in the 1970s, they quickly expanded their presence across Asia and subsequently across the globe, their projects spanning 8 different verticals.

The friendship between Meherwan Daruvala and Shapoorji Sr. has now fostered a global engineering powerhouse, built on a relationship spanning 3 familial generations.

With the support of the Shapoorji Pallonji Group, S&W strives to carve its own identity as a leader in delivering sustainable energy and infrastructure to the world.

The six global coordinators and book running lead managers and two book running lead managers associated with the offer have handled 48 public issue in the past three years out of which 18 closed below the issue price on listing date.

The Price/Earnings ratio based on diluted EPS for fiscal 2019 for the issuer at the upper end of the Price Band is as high as 19.57.

The average cost of acquisition per Equity Share for the promoter selling shareholders is nil per equity share.

Post demerger for the period 09.03.17 to 31.03.18 it earned a net profit of Rs. 450.54cr. on a turnover of Rs. 6884.42 cr. For FY19 it has posted a net profit of Rs. 638.23 cr. on a turnover of Rs. 8449.93 cr. For the demerged period performance, it has posted enhanced other income of Rs. 209.53 cr. for FY19 against Rs. 12.71 cr. for FY18.

For the first year starting from 09.03.17 to 31.03.18, it posted fully diluted EPS of Rs. 29.97 and for fiscal 2019 it has posted an EPS of Rs. 39.85. RoNW for the said periods were 118% and 62% respectively. The issue is priced at a P/BV of 12.24 based on its NAV of Rs. 63.70 as on 31.03.19.

If they consider FY19 earnings and attribute it on post-issue equity capital, then asking price is at a P/E of around 19.6. Thus issue appears fully priced in the given current market status.

As the solar power sector is set for a boom globally and India is also gearing for spending in a big way, SWSL (being the largest solar EPC solution provider) is poised for bright prospects going forward. According to DRHP, SWSL originally planned 25% equity dilution for Rs. 4500 cr. (at a valuation of Rs. 18000 cr.), but now diluting the same stake for Rs. 3125 cr. (at a valuation of Rs. 12500 cr). As the issue appears fully priced in the given market status, investors may consider investment for the long term.

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