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Apr 28, 2012, 10.20 AM IST | Source: Moneycontrol.com

Accumulate Sterlite Ind; target of Rs 123: Angel Broking

Angel Broking is bullish on Sterlite Industries (India) and has recommended accumulate rating on the stock with a target of Rs 123 in its April 23, 2012 research report.

Angel Broking is bullish on Sterlite Industries (India) and has recommended accumulate rating on the stock with a target of Rs 123 in its April 23, 2012 research report.

“For 4QFY2012, Sterlite Industries (Sterlite) reported consolidated net sales growth of 7.6% yoy. However, subdued performance from the aluminium segment dragged the company’s profitability. Adjusted PAT for the quarter decreased by 29.6% yoy. We recommend Accumulate on the stock.”

“For 4QFY2012, Sterlite’s consolidated net sales increased by 7.6% yoy to Rs10,763cr, in-line with our estimate of Rs10,912cr. Net sales growth was driven by increase in power segment sales (+230.4% yoy to Rs737cr). Despite net sales growth of 7.6% yoy, Sterlite’s EBITDA decreased by 11.3% yoy to Rs2,705cr mainly due to a decline in profits from the aluminium segment. EBIT of the aluminium segment declined to Rs23cr in 4QFY2012 compared Rs195cr in 4QFY2011. Sterlite’s associate, Vedanta Aluminium also reported loss of Rs542cr in 4QFY2012 (Sterlite’s share of loss Rs160cr) compared to loss of Rs268cr in 4QFY2011. Sterlite reported exceptional items related to net incidental damages payable to Asarco of Rs423cr and exchange gain of Rs331cr in 4QFY2012. Adjusted net profit decreased by 29.6% yoy to Rs1,377cr, in-line with our estimate of Rs1,311cr.”

“We expect Sterlite to benefit from the expansion of zinc-lead smelting capacity during FY2013-14. While we expect the aluminium segment’s profitability to remain under pressure, the current stock price factors these concerns. At the CMP, the stock is trading at an inexpensive valuation of 3.4x FY2013E and 2.7x FY2014E EV/EBITDA. Considering the ongoing process of group restructuring by the promoter, Vedanta Resources, valuation of Sterlite will mirror the valuation of consolidated company, Sesa Sterlite. We value Sterlite at Rs123, based on the SOTP methodology and recommend Accumulate on the stock,” says Angel Broking research report.   

Institutional holding more than 40% in Indian cos   

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