By Sudeep Arekar

India Ratings and Research (Ind-Ra) has placed Sterling and Wilson Solar Limited’s (SWSL; erstwhile Sterling & Wilson Solar Private Limited) Long-Term Issuer Rating of ‘IND AA’ on Rating Watch Evolving (RWE). The instrument-wise rating actions are as follows:

Instrument Type

Date of Issuance

Coupon Rate

Maturity Date

Size of Issue (million)

Rating/Rating Watch

Rating Action

Proposed fund-based limits*

-

-

-

INR3,000

Provisional IND AA/RWE/Provisional IND A1+/RWE

Placed on RWE

Non-fund-based limits

-

-

-

INR9,180

IND AA/RWE/IND A1+/RWE

Placed on RWE

Proposed non-fund-based limits*

-

-

-

INR87,820

Provisional IND AA/RWE/Provisional IND A1+/RWE

Placed on RWE

Commercial paper#

-

-

-

INR3,000

IND A1+/RWE

Placed on RWE

** The ratings are provisional and shall be confirmed upon the sanction and execution of the loan documents for the above facilities by SWSPL to the satisfaction of Ind-Ra.
#Yet to be issued.


KEY RATING DRIVERS

SWSL successfully completed an INR28,500 million initial public offering (IPO) through sale of stake by its promoters Shapoorji Pallonji and Company Private Limited (SPCPL; 67% stake before the IPO) and Mr. Khurshed Daruwala (33% stake before the IPO) in August 2019. As part of the same, the promoters have diluted their stake in SWSL. Ind-Ra has factored in the strong parentage support provided by SPCPL while arriving at the rating. Post the IPO, the promoters’ shareholding has reduced to around 77.2% and SPCPL’s shareholding to around 50.6% of the total shareholding. Ind-Ra is in discussion with SWSL and SPCPL to understand their revised linkages and the impact of the revised shareholding on the management and operational control of SWSL, if any.

The agency is also evaluating the method of utilisation of the IPO proceeds by the promoters of SWSL. As per the Red Herring Prospectus, SWSL is likely to receive a part/entire proceeds of the IPO from its group company Sterling and Wilson Private Limited (‘
IND A+’/Negative), which are likely to be utilised for reduction of debt by SWSL. Ind-Ra is also seeking update from SPCPL on its various other fund raising plans. 


RATING SENSITIVITIES

The RWE indicates that the rating may be upgraded, affirmed or downgraded. Ind-Ra will resolve the RWE once there is clarity on the revised linkages of SPCPL with SWSL, including the impact of reduced shareholding of SPCPL in SWSL and the method of utilisation of the IPO proceeds by the promoters of SWSL.  


COMPANY PROFILE

Formed after the demerger from Sterling and Wilson Private Limited in March 2018, Mumbai-based SWSL is one of the largest non-original equipment manufacturer solar engineering, procurement and construction players in the world.

FINANCIAL SUMMARY

Particulars

FY19

FY18

Revenue (INR million)

82,404

68,717

EBITDA (INR million)

6,575

5,377

EBITDA margins (%)

8.0

7.8

Total debt (INR million)

22,278

1,841

Interest coverage (x)

6.6

28.9

Net leverage (x)

2.7

0.2

Source: SWSL, Ind-Ra


RATING HISTORY

Instrument Type

Current Rating/Rating Watch

Historical Rating/Outlook

Rating Type

Rated Limits (million)

Rating

31 December 2018

Issuer rating

Long-term

-

IND AA/RWE

IND AA/Stable

Proposed fund-based limits

Long-term/Short-term

INR3,000

Provisional IND AA/RWE/Provisional IND A1+/RWE

Provisional IND AA/Stable/Provisional IND A1+

Non-fund-based limits

Long-term/Short-term

INR97,000

IND AA/RWE/IND A1+/RWE

IND AA/Stable/IND A1+

CP

Short-term

INR3,000

IND A1+/RWE

IND A1+


COMPLEXITY LEVEL OF INSTRUMENTS

For details on the complexity level of the instruments, please visit https://www.indiaratings.co.in/complexity-indicators.

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

About India Ratings and Research: India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies and project finance companies. 

Headquartered in Mumbai, Ind-Ra has seven branch offices located in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Pune. Ind-Ra is recognised by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank. 

India Ratings is a 100% owned subsidiary of the Fitch Group.

For more information, visit www.indiaratings.co.in.

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Analyst Names

  • Primary Analyst

    Sudeep Arekar

    Senior Analyst
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th floor, West Wing Plot C-2, G Block. Bandra Kurla Complex Bandra (East), Mumbai 400051
    +91 22 40001748

    Media Relation

    Namita Sharma

    Manager – Corporate Communication
    +91 22 40356121