Sterlite Technologies - Q4FY21 First Cut - ICICI Direct

(CMP- Rs. 237, Market Cap- Rs. 9398 crore)

Sterlite Tech's performance for Q4FY21 was a mixed bag with a slight topline beat but lower than expected margins. The bottomline beat was also merely a function of lower depreciation and higher other income

Q4FY21 Earnings Summary

- Revenue came in at Rs. 1475 crore, up 27.1% YoY, better than expectations of Rs. 1452 crore (~25% growth). We note that growth is on a benign base as Q4FY20 had 35% YoY decline. We await revenue breakup such as product/services. The order inflows traction, however, has been encouraging with key order wins in Q4 such as a) Strategic partnership with Openreach to help build its new UK full fibre network, b) Multi-million-dollar digital partnership transformation for a leading north African Telco and c) A large-scale deal with a leading UAE Telco for Opticonn solution to advance its 4G, 5G and FTTx network infrastructure

- EBITDA came in at Rs. 256.5 crore (I-direct estimate: Rs. 262.7 crore), up 18.7% YoY. Reported EBITDA margins came in at 17.4% (vs. our estimate of 18.1%), down 123 bps YoY, given the higher employee and other expenses

- PAT came at Rs. 124.4 crore, up 54.9 % YoY, was higher than expected, aided by lower depreciation and higher other income

The company has also maintained that going ahead growth should be driven by growing OFC volumes, optical interconnect business, scaling up SI business and building access solution business. Therefore, traction, going ahead will be a key monitorable. We remain cautious on leverage (net debt/equity at 1.2x and net debt/EBITDA at 3x) and believe cash generation will also be key to re-rating. We will come out with an update soon post the conference call.

Shares of STERLITE TECHNOLOGIES LTD. was last trading in BSE at Rs.230.2 as compared to the previous close of Rs. 236.35. The total number of shares traded during the day was 43532 in over 1354 trades.

The stock hit an intraday high of Rs. 235.55 and intraday low of 229.8. The net turnover during the day was Rs. 10103019.

Source : Equity Bulls

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