Sterlite Industries Q4 PAT seen down 35% at Rs 1249 cr

CNBC-TV18 expects the Vedanta Group company Sterlite Industries to report a decline of 35% YOY in its profit after tax of Rs 1,249 crore for the fourth quarter of FY12.

EBITDA is likely to go down by 19% to Rs 2,446 crore from Rs 3,002.63 crore year-on-year and EBITDA is seen falling at 23.8% versus 30%.             

Net sales are seen going up by 3% at Rs 10,261 crore from Rs 10,000.3 crore during the same period.

On quarter-on-quarter basis, net sales are expected to be flat while profit after tax is likely to go up by 37%.

Note:

On a QoQ basis, EBITDA and PAT would improve as the rupee appreciated marginally during the quarter

In Q3FY12, they accounted for a forex loss of Rs 849.8 crore ((On account of raw material, other income and interest and finance charges))

Sterlite holds 65% stake in Hindustan Zinc (Strong volume growth in HZL will drive its revenues):
-HZL delivered topline at Rs 3093 crore and PAT at Rs 1412.8 crore
-Out of this, the entire topline will reflect whereas the 65% of the bottomline of Hindustan Zinc will reflect (approximately Rs 918 crore)
-Hindustan Zinc contributes nearly 60% to the PAT of Sterlite Industries

Factors:

LME prices correct on a YoY basis but are up on a QoQ basis – Also need to take note of the rupee depreciation:
-Copper, aluminium, zinc and lead prices have corrected by 12-18% on a YOY basis but will be supported by rupee depreciation of roughly 10% since April 2011
-However metal prices were up 4-10% QoQ though impact was marginally offset by stronger rupee boosting QoQ numbers

Volumes will be driven by zinc overseas operations and in power generation:
-Zinc India: Refined zinc and lead production will be roughly 3% higher YoY at 223,000 tons
-Zinc International: Zinc-Lead metal-in-concentrate and Zinc metal was 106,000 tonnes ((including 71,000 tonnes of Zinc and lead metal-in-concentrate (MIC) at Lisheen and BMM and 36,000 tonnes of refined Zinc at Skorpion))
-Aluminum production from Balco is flat at 62,000 tons
-Copper cathode production is flat at 80,000 tons
-Power segment showed strong growth due to commissioning of Sterlite Energy units

Key Focus areas will on the TC-RC margins in copper business, spot power tariffs and fuel costs at Balco CPP and SEL (Sterlite Energy)::
-Copper smelting business will benefit from higher Tc/Rc margins

EBITDA is likely to witness a drop on account of factors like all-around correction in LME prices and higher costs particularly of coal (Alert in Q3FY12, Aluminum business delivered negative margins):
-EBITDA to grow QoQ due to better performance from the zinc and lead businesses Zinc business EBIT (including Zinc International) Aluminum (Balco) EBIT will decline further on account of higher cost of production
-EBIT from the power segment would grow 12% QoQ to INR596m
-Margins maybe under pressure due to expected commissioning delays, lower LME prices and higher raw material costs (coal and bauxite)
-On a QoQ basis EBITDA would improve driven by higher LME prices and stable costs

PAT:
-Zinc business, both international as well as domestic, is expected to drive the bottomline
-PAT would witness an increase of 42% because of certain forex losses in 3QFY12
-Aluminum business continues to be under pressure but Sterlite's share of losses at VAL is expected to decrease substantially