Sterling & Wilson Solar hit an upper-circuit limit of 5% at Rs 300.60 after the media reported that Shapoorji Pallonji Group reduced its stake in software major TCS to pare debt.
According to media reports, Shapoorji Pallonji Group (SPG) has sold 19.5 lakh shares in IT giant, Tata Consultancy Services (TCS), in a block deal done on Thursday. On 5 December, Shapoorji Pallonji, via its holding company, sold 19.9 lakh shares of TCS. The move led to the fundraising of Rs 400 crore. Post both block deals, Shapoorji Pallonji now holds 34.05 lakh shares in TCS.
Reports suggested that the amount will be used entirely to bring down Sterling & Wilson's debt.
The board of Sterling and Wilson Solar (SW Solar) at its meeting held on 14 November 2019, approved a request received from the promoters of the company (Shapoorji Pallonji and Company and Khurshed Y. Daruvala). The promoters were supposed to pay Rs 2,563 crore to Sterling and Wilson Solar by 18 November. Of this, Rs 2,335 crore was the principal and Rs 228 crore was interest.
The promoters on 14 November requested the board to consider a revised repayment schedule for the balance outstanding amount, which was reduced to Rs 2,341 crore (principal amount of Rs 2,085 crore and interest is Rs 256 crore) as on 30 September 2019 due to the significant and rapid deterioration in the credit markets creating a significant liquidity crisis, all of which was unforeseeable and coupled with the lesser than expected realization from the initial public offer (IPO) (given that the amount realised from the IPO was Rs 2,850 crore before expenses and taxes as compared to Rs 4,500 crore as initially contemplated).
Also, the promoters further stated that Shapoorji Pallonji and Company will endeavour to reduce the outstanding loan by Rs 1,000 crore from the level as of the date of listing by 31 December 2019.
Further, the board also decided to levy an additional interest rate of 50 basis points per annum over the current interest rate being applied to the said outstanding loan, taking the applicable interest payable to 100 basis points per annum which is above the weighted average interest rate on borrowings of the company.
In a conference call on 15 November, the company's management said that it was working on a revised payment schedule, but did not specify a time frame for the remaining payment. Shapoorji Pallonji Group chairman Shapoor Mistry also explained to investors that the promoters stand by the company's repayment commitments and a delay does not mean dishonouring that pledge.
Meanwhile, Sterling & Wilson Solar announced at the fag end of market hours yesterday, 12 December 2019, that its Australian subsidiary, Sterling & Wilson Solar Australia, executed a definitive contract for engineering, construction and procurement (EPC) for a 144 MW DC solar farm in Australia amounting to about Rs 827 crore.
Shares of Sterling Wilson & Solar jumped 10.06% in three trading sessions to its current market price of Rs 300.60 from its recent closing low of Rs 273.10 on Tuesday, 10 December 2019.
On the technical front, the stock's RSI (relative strength index) stood at 36.675. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.
The stock was currently trading below its 50-day moving average (DMA) placed at Rs 463.03, but still above its 200 DMA placed at Rs 201.62.
Sterling & Wilson Solar's consolidated net profit soared 37.9% to Rs 80.03 crore on 51.7% drop in net sales to Rs 1,193.33 crore in Q2 September 2019 over Q2 September 2018.
Sterling & Wilson Solar (SWSL) is an end to end solar engineering, procurement and construction (EPC) solutions provider. The company also provides operations and maintenance (O&M) services, including for projects constructed by third-parties.
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