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Sterlite Tech 55% Upside ENAM 2011 TOP Pick
Long Term Intact
● Sterlite Technologies Ltd (STL) is a play on the high‐growth Telecom and Power sectors in emerging
markets. Parentage of Sterlite Group lends strength to STL. The Group, among the lowest cost metal
producers globally, has an enviable track record in executing large projects continuously, in a timely
● STL is only one of 6‐7 players globally, having technology to produce Optic Fiber from silica, and is
one of the lowest cost producers in the world. Volume growth in Optic Fiber and Optic Fiber Cable
(OFC) will drive margin expansion. We expect EBITDA from Telecom vertical rising to ~60% in FY12E.
● Given burgeoning capex in power sector and Value‐add potential through BOT in transmission lines we
expect EBITDA from Power vertical to move to ~40% in FY12E. Capacity expansion will propel it to be
among the top 3 players globally in both segments. Given the long‐term growth prospects we have
Buy rating with a target price of Rs 115 based on 13x PE FY12E.
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