Current Rating and Its Significance
MarketsMOJO currently assigns Sterling & Wilson Renewable Energy Ltd a 'Sell' rating, reflecting a cautious stance towards the stock. This rating suggests that investors should consider reducing their exposure or avoiding new purchases at present, based on a comprehensive evaluation of the company’s quality, valuation, financial trend, and technical outlook. The rating was revised on 22 December 2025, moving from a 'Strong Sell' to a 'Sell' grade, indicating a slight improvement in the company’s overall assessment but still signalling significant risks.
Here’s How the Stock Looks Today
As of 27 December 2025, Sterling & Wilson Renewable Energy Ltd exhibits a Mojo Score of 34.0, which corresponds to the 'Sell' grade. The stock’s recent price movement shows a decline of 1.93% on the day, with mixed returns over various time frames: a modest 0.68% gain over the past week contrasts with a 4.58% loss over the last month and a steep 52.82% decline over the past year. This performance underlines the challenges the company faces in regaining investor confidence.
Quality Assessment
The company’s quality grade is below average, reflecting concerns about its long-term fundamental strength. The average Return on Capital Employed (ROCE) stands at a modest 5.08%, indicating limited efficiency in generating profits from its capital base. Additionally, net sales have grown at an annual rate of 7.26% over the last five years, which is relatively subdued for a renewable energy firm operating in a growth-oriented sector. The company’s ability to service debt is also a concern, with a high Debt to EBITDA ratio of -1.00 times, signalling financial stress and potential liquidity risks.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Valuation Perspective
Despite the challenges in quality, the valuation grade for Sterling & Wilson Renewable Energy Ltd is attractive. This suggests that the stock is trading at a price level that may offer value relative to its earnings potential and asset base. Investors looking for opportunities in the construction sector, particularly in renewable energy, might find the current valuation appealing if they are willing to accept the associated risks. However, the attractive valuation must be weighed against the company’s operational and financial hurdles.
Financial Trend and Stability
The financial grade is positive, indicating some favourable trends in the company’s recent financial performance. Nevertheless, the overall picture remains mixed due to the high level of promoter share pledging, which currently stands at 27.62%. This is a significant risk factor, as pledged shares can exert downward pressure on the stock price in volatile or declining markets. The company’s long-term growth has been modest, and its ability to improve profitability and reduce leverage will be critical for any future rating upgrades.
Technical Outlook
From a technical standpoint, the stock is mildly bearish. The recent price trends and momentum indicators suggest cautious investor sentiment. The stock has underperformed the BSE500 index over the last three years, one year, and three months, reflecting persistent weakness relative to the broader market. This technical backdrop supports the current 'Sell' rating, signalling that the stock may face continued downward pressure in the near term.
Stock Returns and Market Performance
As of 27 December 2025, Sterling & Wilson Renewable Energy Ltd has delivered disappointing returns, with a year-to-date loss of 53.07% and a one-year return of -52.82%. The six-month return is also deeply negative at -31.10%, underscoring the stock’s struggles to recover. These returns highlight the risks investors face and reinforce the cautious stance implied by the 'Sell' rating.
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Investor Takeaway
For investors, the 'Sell' rating on Sterling & Wilson Renewable Energy Ltd signals caution. While the valuation appears attractive, the company’s below-average quality, financial risks related to debt and pledged shares, and a bearish technical outlook suggest that the stock may continue to face headwinds. Investors should carefully consider these factors and monitor any improvements in operational performance or financial health before increasing exposure.
In summary, the current 'Sell' rating reflects a balanced assessment of Sterling & Wilson Renewable Energy Ltd’s challenges and potential. The rating update on 22 December 2025 acknowledges a slight improvement from 'Strong Sell', but the overall outlook remains cautious as of 27 December 2025.
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