Anand Rathi initiates buy rating on Sterling & Wilson; ups target price to Rs 870

The coverage comes amid a surge in renewable energy capacity additions in India and worldwide.

Brokerage Anand Rathi has initiated coverage on Sterling and Wilson Renewable Energy Ltd with a "buy" rating, raising the target price from Rs 670 to Rs 870 per share. Sterling and Wilson is a global leader in solar EPC (Engineering, Procurement, and Construction) and O&M (Operations and Maintenance) services. The coverage comes amid a surge in renewable energy capacity additions in India and worldwide.

In 2023, a record 507 GW of renewable energy capacity was added globally, a 50% increase year-over-year. The International Energy Agency projects an additional 3,178 GW between 2024 and 2028. India's capacity is expected to reach 500 GW by 2030, up from 192 GW at the end of FY24, benefiting EPC companies.

Anand Rathi forecasts solar EPC orders worth around Rs 49,600 crore across markets. Reliance Industries' plan to develop 100 GW of renewable energy (mainly solar and battery storage) by 2030 could provide EPC opportunities worth Rs. 1.1 trillion from FY26-31, with about Rs 30,000 crore for Sterling and Wilson, along with O&M services worth Rs 2,400 crore.

Anand Rathi noted that Sterling and Wilson's stronger financial position, supported by timely fundraising and a stake sale to Reliance Industries (RIL), positions it well to capitalise on global solar capacity additions (estimated at 2,317 GW from 2024-28 by the IEA).

RIL's renewable energy plans present long-term opportunities. It aims to install 100 GW of renewable energy capacity, primarily solar and battery storage, by 2030 to achieve net-zero goals by 2035. This could offer overall EPC opportunities of Rs 1.1 trillion, with Rs 30,000 crore for Sterling & Wilson over FY26-31 (assuming a 50% share), along with Rs 2,400 crore in O&M services.

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