Sterlite Technologies Ltd - Q3FY22 Result First cut - YES Securities

Both Revenue and EBITDA margin below expectation

• Reported revenue of Rs 13.5 bn, down 10% QoQ, led by one off provision of Rs 480 mn in an old contract and some ramping up delay in few contracts. Capacity utilization was 75-80% for optic fibre business and 80-85% for optic fibre cable business.
• North American revenue share has grown to 13% as of Q3FY22. Investing in OFC capacity in South Carolina which would commence operation by Q2FY23.
• Reported EBITDA loss of Rs 507 mn, led by lower revenue and one time provision of Rs 1.15 bn
• Order book grew to Rs 117 bn from Rs 115 bn as of Q2FY22.
• Completed integration of Clearcomm as it ramped up its UK talent base to more than 150 employees.
• Optical interconnect attach rate has grown to 14% in Q3FY22 from 8% in Q2FY22 and on way to achieve attach rate of 100%.
• Other concall highlights
• The one off provision is related to one old contract which is nearing completion. They are still working on collection effort for this provision. The amount is just around 1% of total contract value.
• The sustainable EBITDA margin for the company is around 17-18% which they expect to achieve in FY23.
• Continues to be in multi year network build cycle.
• Total addressable market has grown by 5x over last 5 years.
• The strategy is to shift revenue towards private/ international clients which is more sustainable business.
• Reiterated its strategic financial target to achieve revenue run rate of Rs 100 bn by Q4FY23 and net debt/ Equity of less than 0.5x by Q4FY23.
• Overall, mixed operating performance. It would benefit from multi year digital creation upcycle. We currently have BUY Rating on the stock

Shares of Sterlite Technologies Limited was last trading in BSE at Rs. 249.40 as compared to the previous close of Rs. 269.70. The total number of shares traded during the day was 492728 in over 13762 trades.

The stock hit an intraday high of Rs. 273.70 and intraday low of 247.60. The net turnover during the day was Rs. 126609014.00.

Source : Equity Bulls

Keywords

SterliteTechnologies INE089C01029 STLTECH Q3FY22Results FirstCut YESSecurities