'Not Exiting Sterling & Wilson', promoter says as stock crashes

Shares of the solar sector EPC (engineering, procurement and construction) firm crashed nearly 8% in the last two trading sessions after promoters Daruvala and Shapoorji Pallonji and Company Pvt. Ltd (SPCPL) offloaded about 7.14% stake for ₹1,040 crore through bulk deals. Daruvala sold 3.15 million shares for just under ₹200 crore, as per Bloomberg data.

“I see huge potential for solar EPC in India. I’m not selling out," Daruvala said in an interview on Tuesday. “In fact, along with my wife’s stake, we own about 5.7% in the company, making Sterling and Wilson Renewable Energy our largest family investment by value. I see it as a long-term investment in one of the most exciting industries."

Daruvala’s wife Kainaz holds 5.57% stake in the listed company, shareholding data on the BSE show.

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Daruvala said the stake sale was to fund an investment in Sterling & Wilson Data Centre, a new company that acquired the data centre EPC business from Sterling and Wilson (S&W) in a slump sale.

S&W is an unlisted firm engaged in mechanical, electrical, and plumbing (MEP) services and in electricity transmission and distribution (T&D). Its promoters include the Daruvala family and the SP Group.

S&W sold its data centre EPC business to a clutch of investors to fund a ₹750 crore debt repayment in March this year. The business was housed in a new company that was renamed Sterling and Wilson Data Centre. The investors had put a condition on Daruvala to invest at least ₹200 crore in his personal capacity in the new company as a means of performance guarantee.

It was to fund this investment that Daruvala sold his stake in SWRE.

Debt Crisis Over

Daruvala said the transaction marks an end to S&W’s debt crisis. While the sale of the data centre business helped the unlisted firm settle its dues, listed SWRE has also found its footing.

In 2022, the latter had sold a 40% stake to Reliance Industries (RIL) through primary and secondary deals to raise capital. It further raised ₹1,500 crore through the qualified institutional placement (QIP) route in December 2023.

“The dark clouds have already moved away," Daruvala said. “This was the last of the required stake sales to fix the debt crisis at Sterling & Wilson group. SWRE issues were fixed when we did the QIP last year."

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Now, the S&W group includes four firms—listed SWRE, unlisted S&W that houses the MEP and T&D businesses, Sterling and Wilson Data Centre, and Sterling Generators.

Analysts at Anand Rathi have guided for an upside for SWRE on the back of the government’s push for renewable energy and solar ambitions of Reliance Industries. RIL plans to install 100GW of renewable energy generation capacity by 2030, most of which would be through solar, the analysts noted. This could translate to a business opportunity of ₹1.1 trillion for SWRE over FY26-31, assuming 50% share for outsourced work.

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