Sterlite Industries - 1QFY14 results - Nirmal Bang Institutional

Sterlite Industries (India)'s (SIIL) 1QFY14 results were in line with expectations, with EBITDA being 4% below our estimate, but 3% above consensus estimate. PAT was 3% above our estimate, driven by higher other income, but it was 6% below street estimate due to forex loss.

Revenue remained 15%/13% above our/ street estimates, respectively, due to higher sales in the copper segment, which includes trading revenue as well. We have cut our EBITDA estimates downward by 4%/2% for FY14/FY15, respectively, following lower profitability in copper and aluminium segments. This resulted in 14%/7% cut in our PAT estimates, respectively, for the same period.

We have also revised our estimates for Sesa-Sterlite (combined entity) after a sharp increase in Cairn India (CIL) estimates due to a change in our rupee-US dollar rate assumption.

Our EBITDA estimates have been revised upward by 7%/8% for FY14/FY15, respectively, while PAT estimates have been revised downward by 6%/4%, respectively, due to slippage at SIIL, for the same period.

We have retained our Buy rating on SIIL with a revised TP of Rs100 (down 6% from our earlier TP of Rs106) following lower earnings of Sesa-Sterlite (barring CIL). Despite increase in earnings, CIL's TP has not been revised upwards due to net asset value-based valuation methodology.

Source : Equity Bulls

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