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Sterlite Technologies - Q1 FY22 first cut - YES Securities

Posted On: 2021-07-25 07:20:07 (Time Zone: UTC)

Inline performance - Revenue impacted due to 2nd covid19 wave led disruption.

- Revenue was down 11.2% sequentially to Rs 13,092 mn on account of 2nd covid wave disruption at its manufacturing plants.

- It recorded double digit revenue growth in optical interconnect business on QoQ basis in Q1FY22. Capacity utilization was 68% in optic fibre and around 70% in case optic fibre cable.

- Focus on cost optimisation helped it to post marginally higher EBITDA margin at 17.7% vs 17.4% in Q4FY21.

- Net income declined 7% QoQ Rs 1157 mn, led by lower revenue, party compensated by other cost optimisation measures.

- Its market share has grown from 4.5% in Q1FY21 to 6.5% in Q1FY22 in optical fiber business; with total addressable market growing to $40 bn ( 5x over last 5 years).

- Recently, announced its plans to expand optic fibre cable capacity from 33 mn fkm to 42 mn fkm by FY23 and to achieve Rs 100bn annual revenue run rate by Q4FY23 and D/ E of 0.5 x from current 1x.

- Also announced the acquisition of UK based network integration company, Clearcomm, at total enterprise value of GBP 15.5mn, to augment its presence in Europe.

View: It is expected to benefit from the network creation cycle led by 5G and FTTX which has just taken off. However, the growth in orderbook has been modest and yet to reflect its investment in capability building. It will take time before it is able to position itself as end to end network solution provider. Realization remain stable for the company due to its long term nature of contracts, through there has been some uptick in spot prices of optic fiber. However, most of growth outlook is priced in as it trades at EV/EVITDA of 11x on FY23E EBITDA.

Shares of STERLITE TECHNOLOGIES LTD. was last trading in BSE at Rs. 299.75 as compared to the previous close of Rs. 303.05. The total number of shares traded during the day was 71760 in over 2134 trades.

The stock hit an intraday high of Rs. 309.7 and intraday low of 298.4. The net turnover during the day was Rs. 21799407.

Source: Equity Bulls

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