Sterling and Wilson Solar had a positive start to the new financial year as its stock price gained 8% on April 1 to close at ₹279, after its US subsidiary bagged an order worth $121.7 million. Just a day earlier on March 31, promoter Khurshed Daruvala, had offloaded 4.99% stake in a bulk deal at an average price of ₹250/share to raise ₹2 billion. Post the sale, Daruvala’s direct holding has reduced from 14.76% to 9.77%. He also sold stock worth ₹693 million on December 31, 2020. Overall promoter holding now stands at 69.36% with Shapoorji Pallonji and Company holding 51.48% and Daruvala and family holding the rest.
The stock’s upward run has continued since but the Shapoorji Pallonji group company has had its back against the wall for a while now. In the December 2020 quarter, the solar engineering-procurement-and-construction contractor witnessed a fall of over 55% in its consolidated net profit to ₹224.5 million against ₹502.7 million in the year ago period.
Then, there has been the longstanding issue about outstanding loans made by the company to promoter entities. As of December 31, 2020, the promoters owed the company ₹11.67 billion. Citing the economic slowdown and challenges presented by the pandemic, the promoters had sought an extension last year. The Board approved and revised the timeline to September 30, 2021. In March, Sterling and Wilson Solar sold two SPVs for ₹2.5 billion to raise capital and that was followed by Daruvala’s latest stake sale. After the latest repayment of ₹4.02 billion, the outstanding is now down to ₹7.9 billion.
Even though it listed nearly two years ago, the stock is not widely covered by analysts. Coupled with low domestic institution holding, the stock is also trading much below its IPO price of ₹780. In the December 2020 quarter, institutional holding stood at 9.39% compared with 11.14% in September 2020. The March 2021 institutional holding could see a bump up as the counterparties in the latest bulk deal will be disclosed.
As of December 2020, mutual fund holding stood at 2.33% with Nippon Life India Trustee holding 1.89%. FIIs held 6.6% with BNP Paribas Arbitrage – ODI and Carmignac Portfolio holding 1.35% and 1.12%, respectively. Apart from institutions, IIFL Securities held 1.88%.