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Sterlite Industries
4QFY11 production results
Sterlite reported its 4QFY11 production results today. Strong qoq volume growth
was witnessed across zinc, lead, silver and aluminium. Power production also
surged with 2 units of the 4*600MW Jharsuguda plant now stabilised.
Zinc-lead: Sharp jump qoq; 100kt lead smelter commissioning in 1QFY12
! Refined zinc production in 4QFY11 was 194kt (+29% yoy and +9% qoq) and 712kt for FY11
(+23% yoy). 4Q production was stronger than expected and compares to our estimate of
179kt. Zinc volumes were driven by the new 210kt Dariba smelter which contributed 46kt and
165kt for the quarter and full year respectively. Lead production in 4QFY11 recovered to 18kt
(-10% yoy and +29% qoq) after the maintenance shutdown at the Ausmelt and Pyro smelters
last quarter. (our estimate: 15kt). FY11 production was 63kt, 13% lower yoy mainly due to the
loss of production in the 1H due to shortage of water. Sale of surplus zinc and lead
concentrate was 30kt and 18kt respectively in 4QFY11. Commissioning of the 100kt lead
smelter has been delayed by 1 quarter to 1QFY12.
! Anglo-Zinc: Mined zinc-lead production at Lisheen and Black Mountain was 282kt while
refined zinc production at Skorpion was 152kt for FY11, in-line with historical years.
Attributable refined zinc production for Sterlite since deal closure was 50kt for FY11.
Silver: Capacity ramp-up expected in 2HFY12
! Silver production was 1.6moz (-3% yoy and +19% qoq) in 4QFY11 and 5.7moz (+1% yoy) for
FY11. Due to the slight delay in commissioning of the 100kt lead smelter, silver capacity
ramp-up expected to be back-ended in FY12. Since the ramp-up at the 1.5mt SK mine is on
schedule, company does have the option of selling surplus lead concentrate in 1QFY12.
Copper: Continues to operate at full capacity
! The Tuticorin smelter continued to operate at full capacity producing 80kt of copper cathodes
for 4QFY11. The Australian mine produced 5kt in 4QFY11 (+25% yoy and -29% qoq) and
23kt (-4% yoy) for FY11.
Aluminium: Jharsuguda smelter drives volume growth
! Total aluminium production was 170kt for the quarter (+7% yoy and +17% qoq) (in-line with
our estimate) and 641kt (+20% yoy) for FY11. Balco continued to operate above rated
capacity while Jharsuguda contributed 108kt (+19% yoy and +5% qoq) for 4QFY11 and 385kt
(+46% yoy) for FY11. Lanjigarh saw Alumina production of 184kt in 4QFY11 (-9% yoy and
+25% qoq) and 707kt (-7% yoy) for FY11. With bauxite logistics issues easing, company is
hopeful of operating 1mt Lanjigarh refinery close to rated capacity in FY12.
Energy: 2 units of 4*600MW Jharsuguda plant stabilised
! Power sales was 1,526MU (+60% yoy and +36% qoq) for 4QFY11 and 4,782MU (+46% yoy)
for FY11. The higher sales were due to the incremental contribution of 563MU from the 2
units of (4*600MW) Jharsuguda plant which have now stabilized. The commissioning of the
Jharsuguda plant has been slightly delayed due to need for evacuation capacity. Lines are
being set up to increase the evacuation capacity from 1,050MW. The remaining 2 units are
expected to be commissioned in 2Q and 3QFY12 respectively. Construction of the 1200MW
CPP at Balco is on schedule and the first unit is expected to be synchronised in 1QFY12.
Work at the 2,640MW Talwandi Sabo plant is also progressing on schedule. Six shiploads of
material have been received and erection of fist boiler structure is in progress. 48MW of the
150MW wind power capacity at HZN has been commissioned in March 2011 with remaining
expected to be up by FY12.
! We have a Buy rating on Sterlite with target price of Rs207.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sterlite Industries
4QFY11 production results
Sterlite reported its 4QFY11 production results today. Strong qoq volume growth
was witnessed across zinc, lead, silver and aluminium. Power production also
surged with 2 units of the 4*600MW Jharsuguda plant now stabilised.
Zinc-lead: Sharp jump qoq; 100kt lead smelter commissioning in 1QFY12
! Refined zinc production in 4QFY11 was 194kt (+29% yoy and +9% qoq) and 712kt for FY11
(+23% yoy). 4Q production was stronger than expected and compares to our estimate of
179kt. Zinc volumes were driven by the new 210kt Dariba smelter which contributed 46kt and
165kt for the quarter and full year respectively. Lead production in 4QFY11 recovered to 18kt
(-10% yoy and +29% qoq) after the maintenance shutdown at the Ausmelt and Pyro smelters
last quarter. (our estimate: 15kt). FY11 production was 63kt, 13% lower yoy mainly due to the
loss of production in the 1H due to shortage of water. Sale of surplus zinc and lead
concentrate was 30kt and 18kt respectively in 4QFY11. Commissioning of the 100kt lead
smelter has been delayed by 1 quarter to 1QFY12.
! Anglo-Zinc: Mined zinc-lead production at Lisheen and Black Mountain was 282kt while
refined zinc production at Skorpion was 152kt for FY11, in-line with historical years.
Attributable refined zinc production for Sterlite since deal closure was 50kt for FY11.
Silver: Capacity ramp-up expected in 2HFY12
FY11. Due to the slight delay in commissioning of the 100kt lead smelter, silver capacity
ramp-up expected to be back-ended in FY12. Since the ramp-up at the 1.5mt SK mine is on
schedule, company does have the option of selling surplus lead concentrate in 1QFY12.
Copper: Continues to operate at full capacity
! The Tuticorin smelter continued to operate at full capacity producing 80kt of copper cathodes
for 4QFY11. The Australian mine produced 5kt in 4QFY11 (+25% yoy and -29% qoq) and
23kt (-4% yoy) for FY11.
Aluminium: Jharsuguda smelter drives volume growth
! Total aluminium production was 170kt for the quarter (+7% yoy and +17% qoq) (in-line with
our estimate) and 641kt (+20% yoy) for FY11. Balco continued to operate above rated
capacity while Jharsuguda contributed 108kt (+19% yoy and +5% qoq) for 4QFY11 and 385kt
(+46% yoy) for FY11. Lanjigarh saw Alumina production of 184kt in 4QFY11 (-9% yoy and
+25% qoq) and 707kt (-7% yoy) for FY11. With bauxite logistics issues easing, company is
hopeful of operating 1mt Lanjigarh refinery close to rated capacity in FY12.
Energy: 2 units of 4*600MW Jharsuguda plant stabilised
! Power sales was 1,526MU (+60% yoy and +36% qoq) for 4QFY11 and 4,782MU (+46% yoy)
for FY11. The higher sales were due to the incremental contribution of 563MU from the 2
units of (4*600MW) Jharsuguda plant which have now stabilized. The commissioning of the
Jharsuguda plant has been slightly delayed due to need for evacuation capacity. Lines are
being set up to increase the evacuation capacity from 1,050MW. The remaining 2 units are
expected to be commissioned in 2Q and 3QFY12 respectively. Construction of the 1200MW
CPP at Balco is on schedule and the first unit is expected to be synchronised in 1QFY12.
Work at the 2,640MW Talwandi Sabo plant is also progressing on schedule. Six shiploads of
material have been received and erection of fist boiler structure is in progress. 48MW of the
150MW wind power capacity at HZN has been commissioned in March 2011 with remaining
expected to be up by FY12.
! We have a Buy rating on Sterlite with target price of Rs207.
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