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Sterling and Wilson Solar debuts at discount: What should investors do?

Shares of the solar engineering solutions provider firm fell more than 9 percent in opening deals on August 20.
Aug 20, 2019 / 11:30 AM IST

As expected by most analysts, Sterling and Wilson Solar (SWSL) made a weak debut on August 20. The stock was listed at Rs 700 on the BSE, a 10.26 percent discount to its issue price of Rs 780.

On the NSE, the stock started off trade at Rs 706, down more than 9 percent against the issue price.

Shares of the solar engineering solutions provider fell more than 9 percent in opening deals due to the tepid response to the IPO, and weak market conditions.

The company's August 6-8 IPO, backed by marquee global institutional investors, saw only 92 percent subscription.

The issue comprised an offer for sale by promoters Shapoorji Pallonji (Rs 2,083.33 crore) and Khurshed Yazdi Daruvala (Rs 1,041.67 crore).

At around 1100 hours, the stock traded at Rs 730.55, down by Rs 49.45 or 6.34 percent with respect to the issue price.

Interestingly, even though the stock made an uninspiring debut, analysts showed faith in it.

"We would like to accumulate the stock around Rs 720-740 levels as we like the way SWSL operates business with an asset-light model. Moreover, Shapoorji Pallonji acts as a strong catalyst for a long-term business association," said Prashanth Tapse, AVP-Research at Mehta Equities.

Rajnath Yadav, a research analyst at Choice Broking, said traders can hold the stock as of now, since the listing did not happen at a strong discount. However, he advised that traders should not go for additional buying on listing day. "One should take a call after its quarterly earnings," he said.

The company enjoys a dominant position in solar EPC segment, has a robust order book providing strong revenue visibility, asset light business model, strong parentage of Shapoorji Pallonji Group and strong financials.

Weakness in the global economy is a risk as it will impact overall investment in the solar sector.

Yadav pointed out that the company has a dominant position in solar EPC segment as most Chinese manufacturers have confined themselves to Chinese territories.
Moneycontrol News
first published: Aug 20, 2019 11:30 am

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