Sterling and Wilson Renewable Energy Limited sees a credit rating action

Acuité Ratings & Research withdrew credit ratings across specific bank loan facilities and commercial paper totaling Rs 6,550.00 Crores, with no Non-Convertible Debentures (NCDs) covered under the withdrawn actions ^[1]. The company's regulatory filings disclose the rating withdrawals but do not explicitly confirm full cash redemption or closure across all specific facilities.

Instruments Covered by Withdrawn Ratings

The withdrawn ratings span bank loan facilities and commercial paper, detailed as follows:

• Long-Term Bank Facilities (Rs 4,571.47 Crores): Rated ACUITE BBB- and marked as downgraded and withdrawn ^[2].
• Long/Unspecified Term Bank Facilities (Rs 1,628.53 Crores): Rated as Not Applicable and withdrawn ^[2].
• Short-Term Bank Facilities (Rs 50.00 Crores): Rated ACUITE A3 and marked as downgraded and withdrawn ^[2].
• Unspecified Bank Facilities (Rs 200.00 Crores): Rated as Not Applicable and withdrawn ^[2].
• Commercial Paper (Rs 100.00 Crores): Rated as Not Applicable and withdrawn ^[2].

Status of Redemption or Closure Confirmation

The company formally notified the stock exchanges regarding the instrument-wise rating actions issued by Acuité pursuant to Regulation 30 ^[2]. While the underlying rating rationale notes that certain withdrawals occurred upon a request from the issuer accompanied by a lender No Objection Certificate (NOC) ^[1], the regulatory filings do not provide a comprehensive confirmation of full financial redemption, settlement, or operational closure for the entire Rs 6,550.00 Crores of withdrawn facilities.

Sterling and Wilson Renewable Energy Limited's (SWSOLAR) reported net debt-to-EBITDA ratio varies depending on the basis used, while Acuité's rating rationale does not disclose a specific numerical net debt-to-EBITDA threshold or covenant.

Current Leverage Metrics

As reported in the Q4 FY26 results, the company's leverage positions are as follows:

• Consolidated Net Debt-to-EBITDA (Quarterly): 4.28x ^[8]
• Standalone Net Debt-to-EBITDA (Quarterly): 7.25x ^[9]
• Consolidated Net Debt-to-EBITDA (TTM): 1.68x ^[10]
• Standalone Net Debt-to-EBITDA (TTM): 2.20x ^[11]

Rating Agency Rationale and Thresholds

In Acuité's credit rating rationale and withdrawal notice dated July 31, 2026, the rating agency did not specify a numerical net debt-to-EBITDA covenant or threshold ^[1]. Instead, Acuité evaluated the company's financial risk profile and leverage using the following parameters:

• Debt-to-Tangible Net Worth: Reported at 2.61x for FY2026 (based on total debt of Rs 1,180.21 Crores and a tangible net worth significantly eroded to Rs 452.48 Crores following net losses of Rs 2,510.86 Crores) ^[4].
• Rating Sensitivities and Triggers: Acuité outlined qualitative and quantitative triggers, including maintaining a Debt Service Coverage Ratio (DSCR) above 1.3x on a sustained basis for upward rating actions, and monitoring working capital cycles with gross current asset (GCA) days above 330 days as a downward trigger ^[4]. Specific net debt-to-EBITDA thresholds were omitted from the published rationale sensitivity disclosures ^[4].

Analytical Implications

The wide variance between quarterly net debt-to-EBITDA (4.28x consolidated) ^[8] and TTM net debt-to-EBITDA (1.68x consolidated) ^[10] highlights substantial quarterly earnings volatility, driven by a sharp rebound in Q4 FY26 consolidated EBITDA to Rs 198.69 Crores from Rs 85.53 Crores in Q3 FY26 ^[12]. However, the primary driver for the credit downgrade and subsequent rating withdrawal by Acuité was not net debt-to-EBITDA leverage alone, but the severe erosion of net worth and net losses in FY2026 that elevated the debt-to-tangible net worth ratio to 2.61x ^[4].