Sterlite Technologies - Q1FY21 First Cut - ICICI Securities

CMP- Rs. 135, Market Cap- Rs. 5371 crore

Sterlite Tech's performance for Q1FY21 was weak on the operating front (as expected), which is reflective of demand slowdown/pricing pressure in product segment and Covid-19 impact. This led to a sharp decline in topline, EBITDA and PAT.

Q1FY21 Earnings Summary

- Revenue came in at Rs. 876 crore, down ~39% YoY, and largely in line with expectations of Rs. 860 crore, on account of slowdown in demand as well as pricing pressure in product segment and Covid-19 impact. While not sharing breakup in presentation, the company has indicated that Projects execution has been significantly impacted due to lock down, while production and delivery was hurt due to logistic challenges. We await revenue breakup such as product/services

- EBITDA came in at Rs. 122 crore (I-direct estimate: Rs. 164 crore), down ~62% YoY, impacted by negative operating leverage on account of revenues decline. Lower than estimated EBITDA was owing to higher than expected other expenses, as we had expected some cost rationalization. Reported EBITDA margins came in at 13.9% (vs. our estimate of 19%), down 870 bps YoY

- PAT came in lower at Rs. 6 crore (vs. our expectation of Rs. 28.3 crore), down 95.8% YoY, on account of weaker than expected operating performance

The continued industry level demand supply mismatch remains an overhang and pricing pressure will weigh on product revenue growth at least in the near term, post which 5G traction globally could drive recovery. The company has indicated that H2FY21 will be better than H2FY20. Furthermore, over the next-3 year, STL has guided to (a) double the revenue to Rs. 10,000 crore, (b) reduce the net debt to equity by half to 0.5, and (c) deliver a return on capital employed (RoCE) above 20%. We will come out with an update soon post the conference call.

Shares of STERLITE TECHNOLOGIES LTD. was last trading in BSE at Rs.136.8 as compared to the previous close of Rs. 135.25. The total number of shares traded during the day was 362844 in over 5599 trades.

The stock hit an intraday high of Rs. 140 and intraday low of 131.4. The net turnover during the day was Rs. 49294007.

Source : Equity Bulls

Keywords