CRISIL assigns valuation grade of 5/5 to Sterlite Tech

11269 Investors following Sterlite Optic. Share this News with them.

0

Like this story, share it with millions of investors on M3

CRISIL assigns valuation grade of 5/5 to Sterlite Tech

CRISIL Research has come out with its report on Sterlite Technologies. The research firm has maintained the fundamental grade of 3/5 to the company in its January 25, 2012 report.

Post your opinion here

 

0

Tweet

Share on Tumblr

Sterlite Techno BSE | NSE 30/05/12 Are Mutual Funds betting on Sterlite Techno?

CRISIL Research has come out with its report on Sterlite Technologies . The research firm has maintained the fundamental grade of 3/5 to the company in its January 25, 2012 report.

Sterlite Technologies' (Sterlite Tech's) Q3FY12 revenues outperformed CRISIL Research's expectations, while operating profitability and PAT continued to disappoint. The conductor segment's higher-than-expected realisations and optical fibre and cable division's high volumes drove sales. The conductor business' EBITDA per tonne, though up q-o-q, was below normal. The telecom segment's profitability continued to be low due to sustained plant stabilisation issues in the incremental optical fibre capacity. Depreciation and interest costs were also higher than expected. We may lower our earnings estimates. We maintain the fundamental grade of 3/5.

Q3FY12 result analysis - standalone
• Revenues declined by 6.2% q-o-q (up 14.6% y-o-y) to Rs 6.6 bn. The conductor segment's revenue declined by 8% q-o-q (up 13% y-o-y) to Rs 4.8 bn due to 11% decline in sales volume q-o-q (4% dip y-o-y) on account of cyclicality in orders, while realisation per tonne improved by 3% q-o-q and 18% y-o-y. The optical fibre and cable segment's revenue declined by 3% q-o-q (flat y-o-y) to Rs 1.6 bn due to decline in blended realisation, while volumes remained flat q-o-q. The data cables and system integration business posted Rs 320 mn revenue.

• EBITDA margin improved by 75 bps q-o-q (43 bps y-o-y) to 7.9%. The conductor business' EBITDA per tonne improved to Rs 7,890 from Rs 6,458 in Q2FY12 and Rs 3,591 in Q3FY11. The telecom segment's EBITDA margin remained low at 15.9% (increase of ~30 bps q-o-q and decline of ~800 bps y-o-y) as the company continues to face stabilisation issues in the incremental installed capacity.

• Depreciation increased by ~26% q-o-q (~42% y-o-y) while interest charges were up ~12% q-o-q (~80% y-o-y). Driven by this, PAT declined by ~25% q-o-q (~45% y-o-y) to Rs 95 mn and PAT margin declined by 36 bps q-o-q (153 bps y-o-y) to 1.4%. EPS for the quarter was Rs 0.24.

• Consolidated financials include the financials of the three ultra mega power transmission projects that the company has been awarded on a build, own, operate and maintain basis along with the standalone financials. These projects are in the investment phase and all expenses incurred will be capitalised and, hence, the consolidated P&L statement is unlikely to be materially different from the standalone.

Valuation: Current market price has strong upside
We continue to use the price to earnings multiple method to value Sterlite Tech. We maintain our fair value estimate at Rs 55 per share and the valuation grade is 5/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"