Visit http://indiaer.blogspot.com/ for complete details STRL.BO, Sterlite Industries (India) Limited (Rs176.50) /In-line 2QF11
Performance by Zinc Division
Remain Overweight, but some we see some downside risks in the next 3-6 months.
Sterlite’s zinc division has reported EBITDA of Rs10.9 bn (up 8.8% QoQ and 3.9% YoY). The
EBITDA was 3.1% ahead of our forecast. Notably, the zinc division contributed about 67% of
Sterlite’s consolidated EBITDA and 57% of its PAT in F1Q11.
What we liked: (1) Mined metal production rose to 205 kt, up 12.6% QoQ and 6.4% YoY. (2) The
new 210 kt zinc smelter produced 39 kt, effectively running at 74% in the quarter. Overall zinc
metal production grew 7% QoQ to 176 kt. (3) Admin, selling and other expenses were brought
down to their lowest levels in four quarters, about 12% lower QoQ.
What we did not like: (1) Capacity utilization for older zinc smelters (except for the new 210 kt
hydro smelter) remained uninspiring at 80%. (2) Zinc metal production cost, including royalty was
US$977/t, on our estimate 1% higher sequentially. (3) Cash and cash equivalents of Rs122 bn
remained flattish QoQ despite the strong cash flows.
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