Thursday 19 December 2019

Sterling & Wilson Solar Ltd - Techno Funda Pick


CMP: 319
SL: 280
TARGET: 400 & 490
RISK: 12% - REWARD: 24% & 52%
The promoters of the Company are Shapoorji Pallonji and Company Pvt Ltd and Khurshed Yazdi Daruvala.
SW Solar is engaged in providing Solar engineering, procurement & construction (EPC) solutions.
The company according to IHS Markit is the world's largest Solar EPC Solution Provider with presence in almost 30 countries.
For FY 2019 company had revenues of 8240 crores, with net profit of 639 crores.
The stock currently trades at a Market Cap of 5100 crores (Mcap/Sales of 0.61) and P/E of 8x.
Sterling & Wilson Solar IPO opened in August 2019 at an issue price of 780 and the stock listed around 700.
Post that the stock was marred with rating downgrades for the group over delay over loan repayment, The management during the IPO had promised to repay debt of 1000 crores it had taken as a loan (ICD) from SW Solar which will reduce 1000 crores out of total debt of about 2200 crore on the books of SWSOLAR by CY 2019 end.
Due to group level liquidity crunch the management sought more time to repay the loans and said to be working on a new schedule of repayment.
Due to such uncertainty over repayment of loans the stock price heavily corrected, SW Solar crashed from around 570 at start of November to about 245 at the start of December.
As known Shapoorji Pallonji's wealth remains locked in shareholding of Tata Sons and the Ratan Tata v/s Cyrus Mistry (son of SP Group chairman Pallonji Mistry) boardroom scuffle has resulted in bitter relationship between the two groups.
Recent media reports suggested that the SP Group sold shares in TCS worth almost 400 crores, Now the NCLAT came out with a ruling in Cyrus Mistry's favour seeking to re-appoint Mistry as the Exec Chairman of Tata Group and if at all any announcements on Re-Payment of SW Solar loan comes there will be a huge bounce-back for the stock.
- Cheap valuations
- World's largest SOLAR EPC player
- Good financial performance delivered
- SP Group despite downturn remains a strong promoter group.

The stock as said has gone through heavy correction, the fall has been vertical and has left a lot of gaps on the charts, Since we are punting on a turnaround in fundas, the techno gap-filling at 400 and 490 can happen, The highest single day volume post listing day was at lower levels close to 259, Recent lows of 290 should act as technical support which is why our SL is placed at 280 with a target of 400 and 490 in the next 20 trading sessions.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Sterling & Wilson Solar Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

Wednesday 18 December 2019

Techno Funda - We Are Back

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Dear Readers,
I have been writing this blog since 2014.
Have shared a lot of stocks, Many turned out to be huge multibaggers while many turned out to be duds.
This blog has largely been focused on Value Investing but since 2018 we haven't had a lot of value emerge in stocks hence the blog has stayed muted.
Since a lot of value is not on the table I feel its a good time to start updating the blog with some quality techno-funda ideas and broader market views.
So to sum it up, The Ace Investor blog is back and now slightly more adaptive as we will be using a mix of both basics of Technicals & Fundamentals to pick stocks with stop loss, targets and time frames defined.
Hoping for your continued patronage,
The Ace Investor