Buy Sterlite Techno; target of Rs 168: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey's research report on Sterlite TechnoIn the telecom segment, SOTL exhibited revenue growth of 20.39% YoY at INR 4,960 Mn compared to INR 4,120 Mn on account of volume growth in optical fibre at 5.4 Mn kms compared to 4.6 Mn kms on YoY basis. However, Optic Fibre Cable volumes came lower at 1.2 Mn kms against 2.2 mn Kms last year. The EBITDA came in at INR 1,100 Mn against INR 880 Mn, growth of 25% YoY basis. The EBITDA margin came at 22.18% vis-à-vis 21.36% in the same quarter of previous year. The PAT stood at INR 420 Mn with margin of 8.47%. The Revenue from NFS order will be booked in Q1FY17 due to unexecuted service part of the contract and documentation process.We are expecting company to deliver healthy growth on the back of various govt initiatives like smart cities, Digital India and Defense orders; in addition to capex from telecom players. Aslo, SOTL is moving up in value chain from manufacturer to service provider with acquisition of Elitecore, which will upgrade company to complete solution provider. The proposed demerger will hive off INR 22 from the company. Sterlite Technologies has close to 35% market share in fibre optical space, and expect company to deliver revenue and EBIDTA growth about FY15-18 CAGR of 38% and 31% respectively and PAT with pre-tax RoCE of ~25-26% and RoE of ~30-31 % by FY18. We expect company to do an EPS of INR 8.2 for FY18E. We are valuing company to get 18x valuations and arrived at price target of INR 146 (excl INR 22 of Power division). The CMP is INR 83, where INR 22 will be received from the Power transmission business in next 3-4 months due to demerger which will reduce cost to INR 61 respectively and gives an upside of 102 % from current levels.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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