Sterling and Wilson Renewable Energy Limited (SWREL) has experienced a significant shift in its credit profile, with Acuité Ratings & Research downgrading and withdrawing ratings for several of its long-term and short-term facilities. The downgrades are attributed to sustained pressure on liquidity, erosion in net worth, high gearing, and weak debt coverage indicators, exacerbated by one-time exceptional losses.
Credit Rating Actions for Sterling and Wilson Renewable Energy
Acuité Ratings & Research has announced a series of rating actions for Sterling and Wilson Renewable Energy Limited (SWREL), involving downgrades and withdrawals for various financial facilities. These actions reflect a considerable change in the company’s financial risk profile.
Key Rating Downgrades and Withdrawals
- The long-term rating for bank facilities totaling ₹4571.47 crore has been downgraded to ACUITE BBB- and simultaneously withdrawn.
- Bank facilities amounting to ₹825.00 crore have also been downgraded to ACUITE BBB- / Negative and withdrawn.
- A significant amount of ₹1628.53 crore in bank facilities has had its rating withdrawn, with no applicable rating assigned.
- Short-term ratings for facilities totaling ₹175.00 crore have been downgraded to ACUITE A3.
- Another ₹50.00 crore in short-term bank facilities have been downgraded to ACUITE A3 and withdrawn.
- Bank facilities of ₹200.00 crore have had their ratings withdrawn, with no applicable rating assigned.
- Commercial Paper worth ₹100.00 crore also has its rating withdrawn, with no applicable rating assigned.
Rationale for Rating Changes
The primary drivers for these rating actions include sustained pressure on SWREL’s liquidity position due to insufficient cash accruals against debt obligations. The company has faced a significant deterioration in its financial risk profile, marked by an erosion in net worth, high gearing, and weak coverage indicators. A substantial one-time exceptional loss of approximately ₹2802.18 crore related to write-offs and impairments following an unfavorable arbitration outcome has severely impacted the company’s net worth and profitability in FY2026.
Constraints also arise from moderately intensive working capital operations and susceptibility to price volatility in module prices. However, the company continues to benefit from its established presence in the solar EPC segment, strong parentage, and a healthy order book providing revenue visibility. Key monitors include the company’s ability to manage its liquidity, the receipt of expected indemnity claim recoveries, and timely project-related advances.
Financial Performance Overview
For FY2026 (Actual), SWREL reported an operating income of ₹6163.81 crore. However, the Profit After Tax (PAT) was a significant loss of ₹2510.86 crore, resulting in a PAT Margin of (40.74)%. The Total Debt/Tangible Net Worth ratio stood at 2.61 times, indicating high leverage. The PBDIT/Interest ratio was 2.17 times.
For FY2025 (Actual), the operating income was ₹5387.06 crore, with a PAT of ₹318.26 crore and a PAT Margin of 5.91%. The Total Debt/Tangible Net Worth was 0.31 times, and PBDIT/Interest was 2.95 times.
Outlook
The outlook for Sterling and Wilson Renewable Energy Limited has been revised to Negative, reflecting the stretched liquidity position and ongoing financial challenges.
Source: BSE
