Sterling & Wils. (SWSOLAR)

FairStock Score: 41/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Revenue momentum: quarterly sales of ₹2,092 Cr and 13.88% sales growth
• Piotroski F-Score of 7/9 suggests improving financial health
• ROCE of 16.97% shows decent operating return on capital employed
• Promoter holding of 45.72% aligns interests with minority shareholders

Concerns

• ROE of -82.54% signals major past shareholder value destruction
• Extremely thin net margin: only ₹2 Cr net profit on ₹2,092 Cr quarterly sales
• High leverage with Debt/Equity of 1.83 and zero dividend yield
• Reported free cash flow of ₹360.60 lakh Cr is questionable and must be verified

AI Analysis

Diving into Sterling & Wilson, I feel like a doctor reading a contradictory medical report. Scale is real: quarterly sales of ₹2,092 Cr and 13.88% sales growth show an active construction franchise. But the latest quarter net profit of only ₹2 Cr on that revenue is a razor-thin margin of roughly 0.1%. Benjamin Graham taught me to judge an enterprise by its earning power, not by hope. A P/E of 21.93 on this lumpy earning stream means I am paying for optimism. The ROE of -82.54% is a giant red flag; it suggests past losses have destroyed shareholder equity. Yet ROCE of 16.97% hints that capital employed in operations is earning a decent return. That combination often appears in a turnaround: operational activity improving while the balance sheet is still healing. With debt/equity at 1.83, the healing process is not complete. I also note zero dividend yield; as a value investor I like cash returned, but promoters holding 45.72% keeps management aligned with public shareholders, at least in theory. The P/B of 1.82 and book value of ₹120.91 offer some support, but I prefer to buy below book in uncertain businesses. Profit growth of 47.94% and a PEG ratio of 0.71 look tempting, but a ₹2 Cr quarterly profit means a single bad contract can erase that growth. The Piotroski score of 7/9 is encouraging, and the free cash flow figure, though stated as ₹360.60 lakh Cr, seems inconsistent and needs verification before I trust it. No strong moat exists in civil construction; competition is fierce and contracts are lumpy. This is not a Buffett-type permanent holding. I will watch it as a possible turnaround.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer