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.