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Sterlite Industries
Overweight
STRL.BO, STLT IN
Production numbers across zinc, power ahead of
estimates, more to come over next 2 quarters
• Domestic zinc production ahead of estimates: Sterlite Industries (STLT)
for the first time has given a detailed production report for itself and its
subsidiaries along with parent Vedanta’s production report (for details on
VED please refer to JPM UK analyst Amos Fletcher’s update – Slightly
soft production numbers & updates on Cairn’ dated April 8th). While we
have been highlighting the increasing production profile of STLT’s key
business segments in zinc and power over FY12E, Q4FY11 production
highlights that the ramp up has already started. Refined zinc production
(+9% q/q) came in at 194KT v/s JPMe of 181KT and 178KT in Q3FY11
Refined lead production recovered q/q to 18KT (++44% q/q). Zinc
concentrate sales stood at 30KT and lead concentrate stood at 18KT v/s
18KT and 7KT respectively in Q3FY11. Silver production at 50KT was
also ahead of estimates and up 19% ahead of estimates. As the lead
smelter gets commissioned in Q1FY12, silver production should
increase with volume ramp up more likely in H2FY12E. The silver rich
Sindersar Khurd mine ramp up continues.
• Power business volumes increases: As the CEA provisional data highlights
power production from the 2 commissioned units (600MW each) has picked
up sharply through the quarter (CEA data indicates sharp increase in power
production from Jan through March) at 571MU up from 245MU in
Q3FY11. Our recent site visit had indicated increase in PLF as the
transmission line got commissioned. The first 600MW was capitalized on
1st March 2011, implying interest and depreciation would start flowing
through the P&L.
• Aluminum/Alumina update: An in line quarter with 1% q/q increase in
production. Lanjigarh alumina production increased 25% q/q, though
remains below capacity.
• Zinc International: This was the first full quarter post the acquisition of
Skorpion Mine (the other 2 mines acquisition was completed in this quarter)
and refined zinc production at Skorpion stood at 37KT for the quarter, while
mined metal content (lead + zinc) at BMM and Lisheen stood at 44KT for
the quarter. Full year refined zinc production 152KT for the full year at
Skorpion and 282KT mined metal production at Lisheen and BMM,
implying that Q4 production are broadly in line for the full year
• STLT is up 1.3% today in an overall weak market with other metal/mining
equities down 1-2.5%. We see upside risks to our Rs12.3bn PAT estimate
for Q4FY11E as production volumes have been slightly ahead of estimates.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sterlite Industries
Overweight
STRL.BO, STLT IN
Production numbers across zinc, power ahead of
estimates, more to come over next 2 quarters
• Domestic zinc production ahead of estimates: Sterlite Industries (STLT)
for the first time has given a detailed production report for itself and its
subsidiaries along with parent Vedanta’s production report (for details on
VED please refer to JPM UK analyst Amos Fletcher’s update – Slightly
soft production numbers & updates on Cairn’ dated April 8th). While we
have been highlighting the increasing production profile of STLT’s key
business segments in zinc and power over FY12E, Q4FY11 production
highlights that the ramp up has already started. Refined zinc production
(+9% q/q) came in at 194KT v/s JPMe of 181KT and 178KT in Q3FY11
Refined lead production recovered q/q to 18KT (++44% q/q). Zinc
concentrate sales stood at 30KT and lead concentrate stood at 18KT v/s
18KT and 7KT respectively in Q3FY11. Silver production at 50KT was
also ahead of estimates and up 19% ahead of estimates. As the lead
smelter gets commissioned in Q1FY12, silver production should
increase with volume ramp up more likely in H2FY12E. The silver rich
Sindersar Khurd mine ramp up continues.
• Power business volumes increases: As the CEA provisional data highlights
power production from the 2 commissioned units (600MW each) has picked
up sharply through the quarter (CEA data indicates sharp increase in power
production from Jan through March) at 571MU up from 245MU in
Q3FY11. Our recent site visit had indicated increase in PLF as the
transmission line got commissioned. The first 600MW was capitalized on
1st March 2011, implying interest and depreciation would start flowing
through the P&L.
• Aluminum/Alumina update: An in line quarter with 1% q/q increase in
production. Lanjigarh alumina production increased 25% q/q, though
remains below capacity.
• Zinc International: This was the first full quarter post the acquisition of
Skorpion Mine (the other 2 mines acquisition was completed in this quarter)
and refined zinc production at Skorpion stood at 37KT for the quarter, while
mined metal content (lead + zinc) at BMM and Lisheen stood at 44KT for
the quarter. Full year refined zinc production 152KT for the full year at
Skorpion and 282KT mined metal production at Lisheen and BMM,
implying that Q4 production are broadly in line for the full year
• STLT is up 1.3% today in an overall weak market with other metal/mining
equities down 1-2.5%. We see upside risks to our Rs12.3bn PAT estimate
for Q4FY11E as production volumes have been slightly ahead of estimates.
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