Recent Price Movement and Market Context
The stock recorded an intraday low of Rs.210.35, reflecting a 4.86% drop during the trading session. Over the past four consecutive days, Sterling & Wilson Renewable Energy has experienced a cumulative decline of 9.27%. This downward trend contrasts with the broader market, where the Sensex opened flat and is currently trading at 85,433.48, down 0.33% from the previous close. Notably, the Sensex remains close to its 52-week high of 86,159.02, trading just 0.85% below that peak and maintaining a bullish stance above its 50-day and 200-day moving averages.
The stock's performance today also underperformed its sector by 4.4%, highlighting relative weakness within the construction industry. Sterling & Wilson Renewable Energy is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, indicating a sustained downward momentum in the short to long term.
Long-Term Performance and Valuation Metrics
Over the last year, Sterling & Wilson Renewable Energy's stock price has declined by 59.52%, a stark contrast to the Sensex's 4.49% gain during the same period. The stock's 52-week high was Rs.526, illustrating the extent of the price contraction. This performance places the company well below the benchmark indices and its sector peers.
From a fundamental perspective, the company exhibits a modest average Return on Capital Employed (ROCE) of 5.08% over the long term. Net sales have shown a compound annual growth rate of 7.26% over the past five years, indicating moderate expansion. However, the company's ability to service debt is constrained, with a Debt to EBITDA ratio of -1.00 times, suggesting elevated leverage relative to earnings before interest, taxes, depreciation, and amortisation.
Promoter shareholding includes 27.62% of shares pledged, which can exert additional pressure on the stock price during periods of market decline. This factor often contributes to increased volatility and downward price adjustments in falling markets.
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Profitability and Recent Financial Results
Despite the stock's price challenges, Sterling & Wilson Renewable Energy has reported positive earnings results for seven consecutive quarters. The latest quarterly profit after tax (PAT) stood at Rs.106.90 crore, representing a growth of 291.5% compared to the previous four-quarter average. Net sales for the nine-month period reached Rs.6,029.34 crore, indicating a higher revenue base.
The company’s ROCE for the recent period is reported at 22.4%, which is notably higher than its long-term average. Additionally, the enterprise value to capital employed ratio is 4.8, suggesting an attractive valuation relative to the capital invested in the business. The stock is trading at a discount compared to its peers’ average historical valuations, which may reflect market caution given the broader price trend.
Comparative Performance and Market Position
Over the past year, while the stock price has declined by 59.52%, the company’s profits have risen by 510%. This divergence is reflected in a price-to-earnings-to-growth (PEG) ratio of 0.1, indicating that earnings growth has outpaced the stock price movement. However, the stock has underperformed the BSE500 index over the last three years, one year, and three months, signalling challenges in maintaining market confidence over multiple time horizons.
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Sector and Industry Context
Sterling & Wilson Renewable Energy operates within the construction industry, a sector that has experienced mixed performance in recent months. While the broader market indices such as the Sensex maintain a bullish trend, individual stocks within the sector have shown varied results. The company’s current market capitalisation grade is 3, reflecting its mid-cap status and relative size within the industry.
The stock’s recent price behaviour, including its fall to the 52-week low, highlights the divergence between the company’s operational results and market valuation. This gap is influenced by factors such as leverage, pledged promoter shares, and historical price trends, which continue to shape investor sentiment and trading patterns.
Summary of Key Metrics
To summarise, Sterling & Wilson Renewable Energy’s share price has reached Rs.210.35, its lowest level in the past year. The stock has declined by 59.52% over the last 12 months, while the Sensex has gained 4.49% in the same period. The company’s long-term ROCE averages 5.08%, with net sales growing at 7.26% annually over five years. Debt servicing capacity remains constrained with a Debt to EBITDA ratio of -1.00 times, and promoter share pledging stands at 27.62%. Despite these challenges, the company has reported consistent profit growth and maintains an enterprise value to capital employed ratio of 4.8.
These factors collectively provide a comprehensive view of Sterling & Wilson Renewable Energy’s current market position and financial standing amid its recent price movements.
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