Sterling and Wilson Renewable Energy Q1 FY27: A Slow Start, but a Larger Second Half Is the Plan

Sterling and Wilson Renewable Energy Limited (SWREL) began FY27 with a softer revenue quarter, but with a record order book and a clear message from management that execution is expected to skew toward the second half of the year.

On a consolidated basis, revenue from operations for Q1 FY27 stood at INR 1,590 crore versus INR 1,762 crore in Q1 FY26. Gross profit declined to INR 157 crore (gross margin 9.9%), while EBITDA was INR 96 crore with an EBITDA margin of 6.0%. Despite the slower top line, reported PAT increased to INR 53 crore from INR 39 crore a year ago, helped by a lower effective tax rate as noted by management.

The quarter’s narrative, however, was not limited to reported performance. The company closed June 2026 with a record unexecuted order value (UOV) of INR 13,024 crore. Management indicated that revenue recognition has been impacted because multiple large turnkey projects are yet to commence execution and are expected to contribute more meaningfully in the second half of FY27.

Q1 FY27 performance: domestic EPC carried the quarter

Segment disclosures in the investor presentation show that Domestic EPC remained the primary driver of revenue in Q1 FY27.

Domestic EPC revenue was INR 1,403 crore, while International EPC revenue was only INR 103 crore. O&M contributed INR 84 crore.

The gross profit mix reflected a similar pattern. Domestic EPC gross profit was INR 126 crore, International EPC was INR 11 crore, and O&M delivered INR 20 crore. This also highlights the relatively higher profitability profile of the O&M business, which management expects to stabilize at around 20% gross margin.

The company attributed the muted quarter largely to lower revenue recognition from the EPC segment. It highlighted that there are six turnkey projects (three in India and three in international markets) that are part of UOV but are yet to commence execution. These projects are expected to shift revenue recognition to the second half of FY27.

Order book visibility improves, led by a landmark Egypt win

SWREL’s UOV increased to INR 13,024 crore as of June 2026, up from INR 11,813 crore as of March 2026. Regionally, UOV was split as India 61% and International 39%.

The most prominent development of the quarter was a marquee international order in Egypt. Management stated that the company received a letter of award for a 1,000 MW AC solar PV plant integrated with a 600 MWh battery energy storage system, valued at approximately USD 560 million. The project is being executed through a 50-50 joint venture with Hassan Allam Construction. SWREL’s share of the project value is about USD 280 million, which the company quantified as approximately INR 2,641 crore.

In the earnings call, management provided a timeline for the Egypt project. It expects notice to proceed (NTP) in September 2026, with a two-month limited NTP period, and a total project timeline of 13 to 15 months after NTP. It also stated that the revenue contribution from this project is expected to begin in the last quarter of FY27.

Management also said that the company is seeing increasing activity in the battery storage market, including stand-alone BESS and hybrid solar plus storage projects. However, it reiterated that it is pursuing margin-accretive opportunities and remains selective.

O&M moves toward an annuity-led contribution

The O&M segment continued to show traction. The company reported an O&M portfolio of approximately 18.3 GW as of June 2026, which it described as a significant expansion versus 13.5 GW in FY26. It also stated that Q1 FY27 O&M revenue grew by around 40% year-on-year.

Management expects that the full 18.3 GW portfolio will start contributing fully from Q3 FY27 onwards. The CFO stated that O&M revenue is expected to be in the range of INR 400 crore to INR 450 crore in FY27 compared with around INR 268 crore to INR 269 crore in FY26. On margins, management guided to O&M gross margins stabilizing around 20%.

The growth in O&M portfolio was explained on the call as primarily driven by projects executed by the company moving into the operations phase, along with third-party O&M wins.

Balance sheet: gross debt down, net debt up, working capital still negative

The company’s consolidated balance sheet as of June 2026 showed shareholders’ equity of INR 709 crore (up from INR 651 crore in March 2026). Gross borrowings reduced to INR 1,035 crore from INR 1,164 crore, which management attributed to scheduled repayments.

However, net debt increased to INR 635 crore as of June 2026 from INR 589 crore as of March 2026.

Net working capital remained negative at INR 260 crore (improving from negative INR 329 crore in the prior quarter). The company highlighted that the working capital cycle is expected to improve as customer advances begin to flow for the large turnkey projects that are yet to commence execution.

A notable working-capital datapoint was receivable days increasing to 161 days as of June 2026 from 138 days as of March 2026.

Guidance: growth depends on a strong second half

Management guided for FY27 revenue growth of around 10% to 15%, and clarified in the call that this guidance is excluding Reliance-related opportunities.

The CEO also indicated that the domestic solar EPC market remained slow for a second consecutive quarter due to geopolitical tensions, volatile commodity prices, and high domestic module prices, which deferred new project awards. The company’s bid pipeline for FY27 (excluding BESS) was stated at 27.7 GW, with 92% India and 8% international.

On profitability, management expects EPC gross margins to stabilize in the 8% to 10% range depending on turnkey versus BoS mix, while O&M is expected at around 20% gross margin.

Key takeaways for investors

SWREL’s Q1 FY27 results reflect a quarter of lower execution, particularly in international EPC, but management’s commentary makes it clear that the company is positioning FY27 as a second-half weighted year. The record UOV of INR 13,024 crore and the Egypt 1 GW AC plus 600 MWh BESS order provide visibility, but the timing of project starts remains critical.

The O&M business looks increasingly important as a stabilizing contributor, with management guiding to INR 400 to 450 crore revenue in FY27 and margins around 20%. Meanwhile, the balance sheet shows progress on gross debt reduction, though net debt rose and receivable days increased.

For FY27, the core monitorables are straightforward: commencement and ramp-up of the six large turnkey projects, conversion of UOV into revenue through 2H FY27, and whether margins hold within the guided EPC band of 8% to 10% while O&M scales as expected.