Sterlite Industries Q3 net profit seen up 41% to Rs 1288 cr

Sterlite Industries (India), a subsidiary of Vedanta Resources, is set to declare its results for the third quarter of financial year 2012-13 on Tuesday. Analysts on an average expect profit after tax to grow by 41 percent year-on-year to Rs 1,288 crore in the quarter.

In third quarter of FY12, the PAT was impacted by a forex loss of Rs 850 crore on account of raw material, other income and finance costs. But on quarter-on-quarter basis, analysts feel the profit after tax is likely to fall by 26.1 percent, according to CNBC-TV18 poll. PAT will be impacted by lower other income and forex losses in previous quarter; September quarter included a forex gain of Rs 220 crore. Net sales are seen going up by 7.3 percent YoY to Rs 10,990 crore in October-December quarter, aided by better LME prices and rupee depreciation. Analysts expect net sales to remain flat QoQ as higher lead/zinc sales would be offset by lower power revenues and struggling aluminum business. Earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to rise by 7.6 percent YoY to Rs 2,440 crore in the third quarter, led by Hindustan Zinc. EBITDA margin is likely to be flat at 22.2 percent in December quarter 2012 as against 22.1 percent in a year ago period. LME base metal prices in US dollar terms: Product         Y-o-Y      QoQ
Copper          +5.3%      +2.6%                                
Aluminum      -4.6%       +3.9% (aluminum is the only base metal which is lower on a yoy basis)
Zinc              +2.2%       +3.2%
Lead prices    +10.2%     +11%
Silver             +2.3%       +8.8% Copper Operations to deliver stable performance (constitutes more than 45 percent to total revenues): Copper cathode production is likely to stay flattish with a negative bias and come in at 86,000 tonnes Analysts expect flat performance in copper on a sequential basis but no major improvements in Tc/Rc and net copper on a QoQ basis Sterlite holds 65 percent stake in Hindustan Zinc (HZL). Majority of Sterlite’s PAT comes from HZL: HZL contributes close to 30 percent to Sterlite’s topline as well HZL delivered their topline at Rs 3,178 crore and PAT at Rs 1,612 crore for the third quarter of FY13  Out of this, the entire topline will reflect whereas the 65 percent of the bottomline will reflect in Sterlite's results (approximately Rs 1,048 crore) Power operations (SEL) Sterlite Energy’s plant load factor (PLF) dropped further in Q3FY13 given the subdued production in October and November 2012. Merchant power sales are expected to be lower by 13 percent QoQ at 1.7 billion units, mainly due to evacuation limitations post the grid failure in end August. SEL continues to operate at a PLF of below 45 percent due to evacuation constraint. Realizations are expected to be lower sequentially whereas cost is likely to be higher due to low PLF, say analysts.