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Last Updated : Oct 21, 2016 01:19 PM IST | Source:

Buy Sterlite Technologies Ltd; target of Rs 133: KR Choksey

KRChoksey is bullish on Sterlite Technologies Ltd. has recommended buy rating on the stock with a target price of Rs 133 in its research report dated October 19, 2016.

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KRChoksey's research report on Sterlite Technologies Ltd.

Sterlite Tech is among the global leaders in Optical Communication Products such as optical fibers, fiber optic cables and data cables through its operations in India, China, Brazil and sales network across 5 continents. Sterlite Tech products have enabled top telecom operators with smarter networks in more than 75 countries across the world. Under the Telecom Services offerings, with expertise in designing, engineering, building & managing broadband networks, Sterlite Tech is developing several network projects, such as secure network for the Armed Forces under Network for Spectrum, enabling rural broadband through BharatNet, developing Smart Cities, and establishing high-speed Fibre-to-the-Home (FTTH).

We are expecting company to deliver healthy growth on the back of various government initiatives like smart cities, Digital India and Defense orders; in addition to Capex from telecom players. Also, SOTL is moving up in value chain from manufacturer to service provider with acquisition of Elitcore, which will upgrade company to complete solution provider. Sterlite Technologies has close to 40% market share in optical fiber space and we expect the company to deliver a revenue growth of 38% CAGR and EBIDTA growth of 31% CAGR between FY15-18E. We estimate a pre-tax RoCE of 25-26% and RoE of 30-31% by FY18E. We expect company to do an EPS of INR 6.7 for FY18E. We have a BUY rating on the stock and apply a PE multiple of 20x its FY18E EPS to arrive at price target of INR 133 which gives an upside of 29% from current levels.

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First Published on Oct 21, 2016 12:28 pm
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