SWREL Results - Legacy Issues, New Problems Continue to Cloud EPC Firms Future

Indian renewable energy engineering, procurement and construction (EPC) firm Sterling & Wilson Renewable Energy Ltd (SWREL) reported a net loss of ₹503.41 crore in the second quarter (Q2) of fiscal year 2026, hurt by exceptional items. The company, which had posted a profit in the previous quarter, swung into the red, denting investor confidence amid expectations of stronger performance driven by India’s expanding solar market. The firm said the loss was mainly due to exceptional charges. But what exactly led to this fiasco? 

The Legal Mess Behind ₹ 2,638.42 Cr Write Off

a) Sterling and Wilson Renewable Energy has become a story of what not to do in the Solar EPC business. With an unending stream of troubles linked to loans to its erstwhile promoters, seemingly poorly drafted contracts overseas that landed the firm on the verge of bankruptcy, and continuing troubles with even domestic customers, the firm's past troubles simply refuse to allow a clean start to the well-regarded firm.    

The firm has an agreement in place with erstwhile promoters that trade receivables from a customer undergoing a resolution process under the supervision of the National Company Law Tribunal (‘NCLT’)  and bank guarantees related to liquidated damages encashed by certain customers are supposed to be recoverable from the Promoter Selling Shareholders once crystallized, if not recovered from the customers. Since all future crystallized claims beyond ₹ 300.00 crore will be fully charged back and recovered from the Promoter Selling Shareholders, there will be no further impact on the results of the Parent Company and its subsidiaries, from these old cases, asserts its auditors' report. 

b) But in the meantime, the firm has fresh trouble brewing with another customer where the customer has allegedly wrongfully invoked bank guarantees worth almost Rs 570 crores, where the firm remains hopeful of its case, and hence, has not yet provisioned for the same customer, on being faced with a claim to recover the bank guarantees, has counter sued for Rs 1270 crores.  

c) Then there is the fresh setback in the form of an unfavourable outcome arising from the arbitration order during the quarter, resulting in loss of amounts that were considered recoverable. The adverse order means that the outflows towards honouring settlement with a subcontractor, ₹ 599.70 crore, are considered non-recoverable from the wholly owned subsidiary and consequently written off.

d) If all that wasn't enough, then, during the September quarter in respect of a contract where a Memorandum of Understanding was signed, due to a request for revisions to the key contract terms and their resultant outcome, Sterling and  Wilson now says that there is fresh uncertainty with respect to the projected cashflows thereof. Consequently, the company has recognized an impairment of ₹ 2,038.72 crore from there as well. We assume this is the major project in Nigeria that the company has. 

These led to a total of  ₹ 2,638.42 crore being classified under Exceptional Item in the Statement of Unaudited Financial Results for the quarter and six months ended 30 September 2025. With no end in clear sight for the remaining issues worth an additional over Rs 570 crores, where no provisioning has been made. Or the certainty that the claim of Rs 170 crores made on the erstwhile promoters will be honoured in time, an area where the promoters have a perfect record of non-compliance, actually.

Losses Dent Avenues 

Talking about the financial results, the publicly listed firm reported a year-on-year (YoY) and sequential growth in revenue. However, it reported a loss of Rs 503.41 crore in Q2 due to exceptional items. 

SWREL saw a 69.7% surge in revenue from operations to ₹1,748.60 crore in the September quarter, compared with ₹1,030.49 crore in the same period last year. The company’s total income in the latest quarter also rose 74.7% to ₹1,859.65 crore from ₹1,064.45 crore in September 2024, reflecting improved project execution and higher activity across its renewable energy portfolio.

However, despite the robust top-line performance, SWREL posted a net loss of ₹473 crore in Q2 FY26, reversing from a net profit of ₹7 crore a year earlier. The steep decline in profitability underscores the operational and cost challenges the company faced during the quarter.

The company’s EBITDA fell 79% year-on-year to ₹3.7 crore, while EBITDA margins contracted to 0.2% from 1.7% in the corresponding period last year, indicating pressure on margins despite higher revenues.

On the company's performance, C. K. Thakur, Global CEO, Sterling and Wilson Renewable Energy Group, said, “Despite industry headwinds, SWREL delivered steady operational performance during the quarter, underlining our strong execution focus and strategic market positioning. Our consistent order inflow and expanding opportunities in India and the International market reinforce our future potential. While certain non-recurring write-offs have affected the reported results, our underlying business fundamentals remain sound.”