2025-03-15 20:46:36
Latest Post
Bio Green Papers Limited approves 67:83 rights issue at Rs. 52 per share- Vantage Knowledge Academy Limited enters into MOU with NEEV Credit Ltd
Alkem Medtech to acquire 100% stake of Bombay Ortho
Dalmia Bharat Ltd's subsidiary commences commercial production of 2.4 MTPA grinding capacity
Ritesh International Ltd deposits advance tax of Rs. 25 lakhs
Research
Buy Sterlite Industries - Motilal Oswal
Posted On : 2010-08-09 09:36:11( TIMEZONE : IST )
Sterlite Industries (STLT IN; Mkt Cap USD12.7b, CMP Rs176, Buy)
- Sterlite's 1QFY11 cons. adj. PAT increased 28% YoY to Rs8.6b v/s our estimate of Rs10.7b. Reported PAT of Rs10b included Rs1.4b of gains on FCCB as per AS30 (reported in other income). Results were below estimates largely due to higher costs at Balco and VAL. HZL's Dariba smelter produced 33k tons, while production of old smelters suffered due to shortage of water. Segmental Zinc EBIT increased 29% YoY to Rs9b (-38% QoQ) due to higher volumes and metal prices. Copper EBIT increased 2x YoY to Rs1.9b as TcRc increased from 11.9USc/lb to 13.5USc/lb.
- Aluminum production costs increased due to higher alumina prices, wage inflation due to higher provisioning required on gratuity calculations, higher power costs and unabsorbed costs of the discontinued Balco-1 smelter. Aluminum production at VAL declined 15% QoQ contrary to expectations of a ramp up. VAL's EBITDA was Rs1.4b and loss after tax was Rs2.7b. On an attributable basis, Sterlite's share of the loss was Rs785m.
- Sterlite Energy lit up a boiler for the first 600MW unit, which is expected to be fully synchronized by September 2010. Though there have been delays in the commissioning of this project due problems of visa issuance to Chinese laborers and some hurdles in acquisition of certain pieces of land, it is still a fast track project.
- We expect zinc production to ramp up in subsequent quarters. Due to volatility on LME, we have cut the price forecast for 2QFY11 from US$2,200 to US$2,000/ton. As a result, our FY11 average LME price assumption is cut to US$2113/ton. Sterlite cut its loans to VAL by Rs65b during the quarter. Gross consolidated cash was Rs247b v/s debt of Rs80b. Net cash surplus on an attributable basis was Rs124b. There is still no improvement in the visibility of bauxite mines, which will drag production growth and margins of aluminum. Production growth of zinc, lead and silver and the sale of surplus power from Balco and Sterlite Energy will drive earnings at CAGR of 37% over FY10-12. Buy.
