Nigeria would be a big plus if happens. Problem is that management is casually reducing thier guidance given excluding Nigeria. Even there was not much update on reliance orders.
Ceo leaving is certainly worrisome. Could be related to how he misled everyone in the recent quarters. If it’s just a client pushing it by a quarter, they could simply state that part of Q4 revenue will show up in Q1 next year. But nothing of that sort.
However, my view is that Ops leverage would show up and PAT margin will go up as they reach close to 10k revenue. So, to me, that feels like the best case. I also hope that the new ceo comes from a reputed company that gives investors community soke confidence.
7 Likes
In my experience this typically happens when a new Senior Management team appointments are done by Main Promoters who want to direct company to better growth trajectory OR put their known reliable folks in charge.
Letting a CEO go who didn’t perform is a good pointer for future but who gets his position is important trigger.
Also, For Nigeria Order of 2 billion USD , i think such bigger orders involving a Govt entity and multilateral agenices typically takes lot of time and contract has to be fine tuned to each parties required clauses, risk assessment and this takes lot of negotiations on each and every finer details
8 Likes
My back of envelope notes about SWSolar:
- Company guided for 8000 Cr but now can achieve only 6000-6500. Still a good number. But market is disappointed due to overpromising.
- Credit rating improvement would ease the line of credit and cost. Should allow them to grow
- Reliance new energy limited holds 32% of shares. Gives a comfort in terms of order inflow
- Concerns - CFO and CEO resignation in last quarter. Could be that the promoter group wanted a rejig. Can’t use it as a deciding factor as no other info is known. New CEO profile looks similar to previous one.
- The stock price has significantly corrected from 1 year ago with PB correcting from 18 to just 6 now. PE is not meaningful at the moment as the co is just turning profitable.
- Earnings are just turning positive. The EPS corresponding to the revised estimate (6500 Cr) is around 15, which should give a PE of about 17. Still could be a bit expensive, but given the growth rate it is agreeable.
- If the company reaches a steady state revenue of 8000 Cr (mgmt mentioned about 2500 Cr of Q4 revenue as steady state), it can have an EPS of about 23.5.
- Considering other similar companies like KPI green, if we take a target PE of 20 in FY26, we can arrive at target price of Rs. 460 compared to current Rs 250.
- Strong order pipeline is there even without the Nigeria project.
Disc: Had exited with some loss. Might add now again as risk reward seems fair.
5 Likes
Guys while I like SW real potential( biggest solar epc player) but I don’t understand why they are working on 3-4% EBITA margins? Their peers are earning 10-15% EBITA margins.
Can anyone help me to know what is their future guidance about margins (short term and long term?
Thanks
2 Likes
Just fed the latest concall and analyst report into deepseek and asked it to summarize.
Causes of Low EBITDA Margins
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Execution Delays:
“realigned project timelines as per customer requirements… likely to result in execution spill over by 1 to 2 quarters” (Chandra Thakur, CEO).
“legacy project… incurred a one-time cost to achieve final punch point costs” (Sandeep Mathew, CFO).
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Financial Constraints:
“progress on easing up limits on the non-fund-based side has been slower than hoped” (Sandeep Mathew).
“recurring overhead remaining steady… operational leverage not yet fully realized” (Sandeep Mathew).
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Competitive Bidding:
“PSU orders are most competitive… witnessed lower margins” (Chandra Thakur).
Outlook for Margin Improvement
Source: Q3 FY25 Earnings Call Transcript | Anand Rathi Report.
1 Like
Does reliance have seat at the SW board ?
How much % of total projects SW is doing for Reliance ?
Anyone around here who may answer ? (The query is genal query and is not about SW solar or solar project …this is about any type of project)
For ex. a company does 100 Cr project for reliance where reliance has 40% stake.How much company can charge them…can they charge 15% margin ? …if yes… does reliance get any benefit out of this 15% ?
Anyone aware about what happened to companies where reliance took stake and got them to execute projects ? how has been their growth ?
3 Likes
Appointment of Mr. Ajit Pratap Singh as CFO.
Any update on nigeria project?? If someone has any info.
