Sterlite Technologies - Q4FY12 Result Update - Padmakshi Financial Services

Result Highlights

Sterlite Technologies Ltd. (STL) reported a Net Revenue of Rs. 809 Crs. (up 19% yoy) for Q4FY12. It was below our expectations of Rs. 840 Crs. Revenues from the Telecom segment grew by 19% yoy to Rs. 261 Crs. whereas the power segment revenues grew merely by 7% to Rs. 548 Crs.

The company posted a net EBITDA of Rs. 70 Crs. (in line with our expectations) with margins of 8.67% (up 30 bps qoq).Net Profit saw a growth of 60% to Rs. 16 Crs. (in line with our expectations) for the quarter as compared to Rs. 10 Crs. in Q4FY11.

Order book status and Future plans update

The company's order book currently stands at Rs. 2300 Crs. of which power accounts for Rs. 2050 Crs. and telecom for the remaining. PGCIL continues to be its largest customer with orders of Rs. 1300 Crs.

The North-East Interconnection Project is on schedule with 50% of activities completed. The management indicated that the project will be completed by this fiscal and will generate cash by FY14. The Bhopal Dhule Transmission project has advanced from the survey phase to design & engineering phase and most key orders related to this project have already been awarded, while orders for Jabalpur Transmission project would be finalized by this fiscal.

The management continues to maintain its target of expanding it's OF capacity to 16m fkm and its PC capacity to 200,000MT for which the capital expenditure is already incurred.

Valuations

The overall numbers were in line with our expectations for FY12. At the CMP of Rs. 33, the stock is trading at 10.7x FY13E EPS of Rs. 3.07. We upgrade the stock to BUY on the basis of valuations which looks attractive.

We have a 1 year target price of Rs. 46 (potential return of 39 %). Improvement in the Interest Rates Scenarios and Fall in Crude Oil (Fuel) prices could further enhance the profitability and are therefore the upside risks for our estimates.

Source : Equity Bulls

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