Sterling and Wilson Renewable Energy Limited — Q3 FY26 earnings call

Call held 16 Jan 2026

Management summary

Sterling and Wilson Renewable Energy Limited reported a strong Q3 FY26, achieving its highest-ever quarterly revenue of ₹2,092 crores and significantly boosting its order book with ₹3,086 crores in new wins, including major projects from Adani Green and Serentica. While operational EBITDA saw healthy growth, profitability was impacted by a one-off ₹30 crore charge for the Conti legal matter and increased interest costs from recent borrowings. The company remains confident in its revised order inflow guidance of over ₹11,000 crores for FY26 and expects improved margins and reduced interest expenses in the coming quarters.

Highlights

  • Highest ever Q3 FY26 revenue of ₹2,092 crores, with 9-month revenue growing 48% YoY to ₹5,602 crores.

  • Strong order inflow of ₹3,086 crores in Q3 FY26, contributing to a YTD inflow of ₹6,929 crores, leading to a revised FY26 guidance of over ₹11,000 crores (60%+ YoY growth).

  • Operational EBITDA for Q3 FY26 at ₹105 crores, showing significant improvement from ₹62 crores in the prior quarter and ₹90 crores in Q3 FY25.

  • Net working capital improved to negative ₹407 crores from negative ₹279 crores in the previous quarter, maintaining a negative working capital cycle.

  • Secured a gigawatt-scale order worth ₹1,381 crores from Adani Green and a 790-megawatt hour BESS project worth ₹170 crores from Serentica, strengthening market position.

Concerns

  • An additional charge of ₹30 crores for legal fees related to the Conti matter impacted non-recurring overheads and reported PBT/PAT this quarter.

  • Interest costs increased significantly due to new borrowings of ₹500 crores from IREDA and ₹100 crores from an NBFC, with Q4 FY26 expected to be the highest before coming down from Q1 FY27.

  • O&M margin dipped to 18% from the usual 20-25% range due to a one-off defect liability expense in an Australian project.

Key financials

3 periods

Headline

  • Net Debt
    ₹738 Cr
    QoQ -0.5%
  • Net Working Capital
    ₹-407 Cr
    QoQ -45.8%

Q3 FY26

  • Revenue
    ₹2,092 Cr
  • Gross Margin
    9.5%
    YoY +0.1% QoQ +0.6%
  • Operational EBITDA
    ₹105 Cr
    YoY +16.6% QoQ +69.3%
  • Recurring Overheads
    ₹93 Cr
  • O&M Margin
    18%

9M FY26

  • Revenue
    ₹5,602 Cr
    YoY +48%
  • Gross Margin
    10%
  • Operational EBITDA
    ₹289 Cr
    YoY +115%

What they filed

Q1 FY27: revenue down 9.8%, net profit up 35.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,030 1,837 2,519 1,762 1,749 +70%2,092 +14%1,946 −23%1,590 −10%
EBITDA18 70 134 85 4 −78%67 −4%146 +9%79 −7%
Net profit9 17 55 39 -478 −5411%2 −88%142 +158%53 +36%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹10,413 Cr

as of 2025-12-31 quantified

14.5% YoY 12.1% QoQ

Inflow this quarter

₹3,086 Cr

Composition

  • Domestic Indian projects (geography) 75%
  • International (Europe) (geography)
  • International (South Africa) (geography)

Pipeline

other

Market bids can surpass 30 gigawatt for FY27; 6-7 gigawatt of orders likely to be bid out in India this quarter.

The nature of the order book continues to improve with commercial structures that minimize commodity price exposure, accelerate cash flows and are less demanding on the balance sheet.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Net ₹738 Cr
    • New borrowing Loan from IREDA disbursed in September 2025 ₹500 Cr
    • New borrowing Loan from an NBFC during the current quarter ₹100 Cr
    Our debt levels have remained stable during the quarter, with net debt decreasing by approximately INR4 crores compared to last quarter and stands at INR738 crores.
  • Liquidity Liquidity disclosed Raised fresh funds of ~INR 2,500 crores since start of fiscal (fund-based and non-fund based limits). Received full indemnity proceeds from Mr. Khurshed Daruvala, expecting Shapoorji Group payment by Jan 31.
    We have been able to raise fresh funds to the tune of around INR2,500 crores since the start of the fiscal. That includes both fund-based as well as non-fund based limits. With respect to indemnity proceeds, we have received the full amount from Mr. Khurshed Daruvala, while we are expecting Shapoorji Group payment by January 31.

Guidance & targets

Order Inflow

  • Annual Order Inflow Order Inflow · FY26 · High confidence >₹11,000 crores
    We are happy to announce that with the orders already achieved and a few more orders in advanced stage of closure, we are increasing our order inflow guidance to more than INR11,000 crores in this fiscal, which is more than 60% year-on-year growth in order inflows and will mark this fiscal as one of the most successful ever in terms of order bookings for the company.

    — C.K. Thakur

  • Adani Order Volume Order Inflow · Annual · Medium confidence 1 gigawatt+
    depending on our performance, which we are, I mean, pretty sure about delivering good, we should be expecting, if not more, at least the same gigawatt level kind of operations every year for them.

    — C.K. Thakur

Revenue

  • Revenue Growth Revenue · FY26 · High confidence 15-20%
    So in terms of revenue growth, we have guided for the current year around 15% to 20% growth over last year. We are on the same guidance.

    — Ajit Pratap Singh

  • Revenue Growth Revenue · FY27 · Medium confidence 15-20%
    And for the next year also, we can consider similar kind of growth, 15% to 20% in the revenue with the gross margin, what I indicated during our discussion.

    — Ajit Pratap Singh

Margin

  • Gross Margin Margin · Ongoing · High confidence 8-10%
    So in terms of gross margin, as we've indicated earlier also, we expect a gross margin in the range of 8% to 10%.

    — Ajit Pratap Singh

  • EBITDA Margin Margin · Future · Medium confidence 5%+
    So we're expecting in the future, the EBITDA margins to be in the range of 5% plus and gross margin, as I indicated, 8% to 10%. So that's what we can guide at this point in time.

    — Ajit Pratap Singh

  • O&M Margin Margin · Future · Medium confidence 20-25%
    But otherwise, we continue to maintain the guidance of 20% to 24%, 25% in the times to come.

    — Ajit Pratap Singh

Interest Cost

  • Average Quarterly Interest Cost Interest Cost · From Q1 FY27 · High confidence ₹35-40 crores
    We can expect around INR35 crores, INR40 crores per quarter on an average basis.

    — Ajit Pratap Singh

What to watch in Q4 FY26

Interest Cost Trajectory

From Q1 FY27
Current Elevated due to new borrowings (₹500cr IREDA, ₹100cr NBFC)
Target Come down to average ₹35-40 crores per quarter

Why it matters

Directly impacts net profitability; verification of management's expectation for debt cost reduction.

With the repayment of these loans, majorly in the next year, FY '27, we expect the interest cost to come down... We can expect around INR35 crores, INR40 crores per quarter on an average basis.

Risks & concerns

  • Conti Legal Matter

    medium

    An additional charge of ₹30 crores for legal fees related to the Conti matter impacted non-recurring overheads this quarter, though management believes the matter is now over.

    Management acknowledged

  • Module Price Volatility

    medium

    Turbulence in module prices is expected for 1-2 months due to withdrawal of Chinese subsidies, but the company mitigates this by transferring module price risk to clients until NTP date, and the Indian market is expected to be immune due to DCR/ALMC.

    Management mitigated

  • Nigeria Project Delays

    medium

    The Nigeria project is still ongoing but has moved to the Ministry of Finance for SPV operations, indicating potential delays or changes in execution.

    Analyst acknowledged

  • O&M Defect Liability Expense

    low

    A one-off defect liability expense in an Australian project caused O&M margin to dip to 18% this quarter, but management expects it to return to the 20-25% range.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Gross Margin & Other Balance Sheet Risks Direct
in terms of gross margin, as we've indicated earlier also, we expect a gross margin in the range of 8% to 10%... at this point in time, there is no crystallized foreseeable loss which is not covered right now.

Addresses core profitability and lingering concerns about past exceptional losses, providing reassurance on the balance sheet.

Asked by Sameer Dalal

Adani Framework Agreement & Future Capacity Direct
this is 5 years or more framework arrangement and the scope is defined. Contractual terms and conditions have been agreed... we should be expecting, if not more, at least the same gigawatt level kind of operations every year for them.

Clarifies the nature and potential scale of the significant Adani partnership, a key growth driver for future order inflows.

Asked by Puneet

EBITDA Margin & One-off Costs Direct
in one of the case in Australia, we have incurred certain expenses on defect liability during O&M. So those costs have been accounted for, but those are normal business expenses basically, although one off, but normal business expenses in terms of our O&M cost. So O&M margin, that's why came down a little bit during the quarter, and that has impacted our EBITDA.

Explains the discrepancy between gross margin and EBITDA margin, attributing it to a specific one-off O&M expense rather than a structural issue.

Asked by Bajrang Bafna

Interest Cost Outlook Direct
during the current quarter, we have also taken another loan from an NBFC, for INR100 crores. So this put together the INR600 crores addition in our gross debt. That has increased the interest expenses. With the repayment of these loans, majorly in the next year, FY '27, we expect the interest cost to come down.

Provides clarity on the reason for increased interest costs and the expected trajectory, which is crucial for assessing future net profitability.

Asked by Bajrang Bafna

Nigeria Project Status Partial
Nigeria, it is still on. I will not say I mean now what has happened is that basically the Ministry of Finance has taken over the SPV operations... So at this stage, I can only say that there's still things are going on.

Indicates uncertainty and potential delays for a previously discussed international project, highlighting a risk to the international order book.

Asked by Anuj Jain

Module Price Volatility & Risk Mitigation Direct
every single contract that we are signing, the contract has protection that the client has to take responsibility till NTP date.

Explains how the company is mitigating the risk of module price fluctuations, a key concern in the solar EPC sector, by transferring the risk to the client.

Asked by Sagar Parekh

Tax Impact from Conti Losses Direct
On stand-alone profit because of the Conti case which we lost, and we took a hit -- in terms of tax profit, we are tax negative. Basically, we had activated tax losses which can be set off over some future periods of profit. So that's why in our stand-alone financials, now we are not getting any tax impact.

Clarifies the reason for low tax outgo this quarter and the benefit derived from past losses, impacting reported net profit.

Asked by Saurabh Srivastava

Reliance Project Margins Evasive
I think this is too premature basically to talk about this. Yes, but it will come up. Once I think -- I mean soon, this traction has to happen, so then we will give you the guidance on this.

Highlights that details on a potentially significant future project are still under wraps, indicating a lack of immediate visibility for investors on its financial impact.

Asked by Saurabh Srivastava

3 min read 6 chapters

Detailed narrative

Strong Revenue Growth and Order Inflow Momentum

Sterling and Wilson Renewable Energy Limited achieved its highest-ever Q3 FY26 revenue of ₹2,092 crores, contributing to a 48% YoY growth in 9-month revenue to ₹5,602 crores, primarily driven by improved execution in the domestic EPC business. New order inflows for the quarter totaled ₹3,086 crores from four project wins, bringing the year-to-date order inflow to ₹6,929 crores. Management revised its FY26 order inflow guidance upwards to over ₹11,000 crores, representing more than 60% YoY growth, indicating strong future revenue visibility.

Robust Order Book and Strategic Partnerships

The unexecuted order book stands at a healthy ₹10,413 crores as of December 31, 2025, with approximately 75% comprising domestic Indian projects. A significant win this quarter was a gigawatt-scale order from Adani Green for a balance of system package valued at ₹1,381 crores, alongside a multi-year strategic partnership framework agreement. The company also secured a 790-megawatt hour battery energy storage project from Serentica worth ₹170 crores, solidifying its BESS credentials and expanding its project portfolio.

Profitability Impacted by One-offs and Rising Interest Costs

While the Q3 FY26 gross margin improved sequentially to 9.5% and operational EBITDA reached ₹105 crores, reported PBT and PAT were impacted by an additional charge of ₹30 crores related to legal fees for the Conti matter. Interest costs also increased due to new borrowings of ₹500 crores from IREDA and ₹100 crores from an NBFC, leading to an expectation that Q4 FY26 will see the highest interest expense before a projected decline from Q1 FY27 to an average of ₹35-40 crores per quarter.

O&M Business Growth and Temporary Margin Dip

The Operations and Maintenance (O&M) business continues its growth trajectory, with its portfolio reaching the 10-gigawatt mark, positioning it as a steady annuity stream. However, the O&M margin for Q3 FY26 experienced a temporary dip to 18% from the usual 20-25% range. This was attributed to a one-off defect liability expense incurred in an Australian project, which management expects to be a temporary deviation, with margins returning to historical levels.

Mitigation of Module Price Volatility and Tax Benefits

The company has implemented a strategy to mitigate risks from module price fluctuations, with new contracts stipulating that the client bears the module price risk until the Notice to Proceed (NTP) date. This provides protection against market turbulence, such as that expected from the withdrawal of Chinese export rebates. Additionally, the company benefited from a lower tax outgo this quarter by setting off accumulated tax losses from the Conti case against its standalone profits, resulting in a tax-negative position.

Outlook on Future Growth and Market Dynamics

Management guided for a 15-20% revenue growth for FY26 and expects similar growth for FY27, maintaining gross margins in the 8-10% range and targeting 5%+ operational EBITDA margins. The Indian renewable energy sector is expected to see significant growth, with market bids potentially surpassing 30 gigawatts in FY27. The company is strategically focusing on repeatable executions and long-term engagement frameworks with large developers, aligning with the evolving market preference for experienced EPC partners.

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