Sterlite Industries - March 2013 Results Preview - Motilal Oswal

- Net sales to increase 4% QoQ: We expect consolidated net sales to increase 4% QoQ (up 3% YoY) to INR112b. Zinc/lead is expected to report higher sales due to higher sales volume and realization. Although evacuation constraints remain at SEL, it will partially benefit from the new transmission line. Aluminum production from Balco is likely to remain flat QoQ at 62k tons, while copper cathode production is likely to decrease 11% QoQ to 82k tons.

- EBITDA to grow 6% QoQ: We expect EBITDA to grow 20% QoQ (up 3% YoY) to INR28b mainly on account of improved performance from HZL. Copper EBIT is likely to increase 15% QoQ to INR1.8b. Aluminum (Balco) EBIT would increase 9% QoQ to INR97m. EBIT from the power segment should improve to INR1.4b but will still be below 1HFY13 levels.

- Maintain Buy: We expect earnings to remain flat over FY12-15E at INR55b due to project commissioning delays, higher raw material costs (coal and bauxite), and despite lead/zinc production growth. The stock trades at 5.6x FY15E EPS and an EV of 2.6x FY15E EBITDA. Maintain Buy.

Source : Equity Bulls

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