Sterlite Technologies - Q2FY21 First Cut - ICICI Securities

(CMP- Rs. 157, Market Cap- Rs. 6212 crore)

Sterlite Tech's performance for Q2FY21 was weak on the operating front as, expected (albeit better than Q1), which is reflective of the weak demand in product segment and residual Covid-19 led execution challenges in solutions /services business

Q2FY21 Earnings Summary

- Revenue came in at Rs. 1159 crore, down 14.7% YoY, tad better than expectations of Rs. 1100 crore (~19% decline. We await revenue breakup such as product/services. The order inflows traction, however, has been encouraging with key order wins in Q2 such as a) fibre rollout for 10 circles for Airtel in India, b) Opticonn solution for a leading telecom player in Europe, c) Digital transformation for a leading telecom operator in Africa and d) Wifi-hardware & Wifi service management platform (Access Solutions) for leading telecom operator in Japan

- EBITDA came in at Rs. 202 crore (I-direct estimate: Rs. 198 crore), down 29.8% YoY, impacted by negative operating leverage on account of revenues decline. Reported EBITDA margins came in at 17.5% (vs. our estimate of 18%), down 376 bps YoY

- PAT came in lower at Rs. 58.5 crore (vs. our expectation of Rs. 63,5 crore), down 63,4% YoY, on account of weaker than expected operating performance and higher depreciation

The continued industry level demand supply mismatch has been an overhang and optical fibre industry, as per company, is likely to grow by 6% YoY in H2. The company has also indicated that H2FY21 will be better than H2FY20. Therefore, traction, going ahead will be a key monitorable. We will come out with an update soon post the conference call.

Shares of STERLITE TECHNOLOGIES LTD. was last trading in BSE at Rs.158.55 as compared to the previous close of Rs. 151.75. The total number of shares traded during the day was 238698 in over 4670 trades.

The stock hit an intraday high of Rs. 159.75 and intraday low of 151.05. The net turnover during the day was Rs. 37437785.

Source : Equity Bulls

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