Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong 4Q results
Sterlite’s 4Q results were strong with net profit rising 39% YoY – above
expectations – though we remain puzzled with the sharp QoQ rise in other
income. Margins expanded QoQ in all divisions helped by strong commodity
and by-product prices. FY12-13 should see strong profit growth boosted by
ramp-up of power capacities in SEL and Balco, metal and silver output in HZL,
full accretion of Anglo-Zinc and higher TC/RCs in copper business. A key
negative in the result was the disclosure that loan to VAL still stands at
Rs80bn, virtually unchanged from FY10. We are not hopeful of this money
coming back. We upgrade FY12 EPS 1% and FY13 EPS 17%. Maintain O-PF.
Impressive performance across divisions
Sterlite registered a sequential improvement in EBIT margins across divisions in
4Q. We are particularly impressed by performance in copper, where EBIT rose
54% QoQ helped by higher TC/RCs and by-product prices. Aluminium EBIT, too,
rose a strong 64% QoQ helped by higher LME prices. HZL’s performance was
impressive on all operating metrics (higher-than-expected production and a lower
QoQ rise in costs) with higher sales of silver-rich lead concentrate giving an added
boost to profits. The recently acquired assets of Anglo-Zinc are already making
their presence felt adding ~US$100m (~14%) to consol EBITDA. As a result, 4Q
consol EBITDA rose 44% YoY and came in 13% above estimates. Higher other
income, lower depreciation and lower tax rate resulted in a higher net profit beat
though we will seek clarity on the sharp QoQ rise in other income.
Multiple growth levers over FY12-13 even accounting for project delays
Even accounting for project delays, the power units in Sterlite Energy and Balco
will make a big delta to consol profits over FY12-13. Accretion from Balco could be
higher if it obtains all clearances for its captive coal mine by mid-FY12, though we
are sceptical here. HZL’s ramp-up of silver output is poised to accelerate in FY12
at a time when silver prices are at multi-decade highs. The full impact of Anglo-
Zinc on earnings will be seen in FY12. Copper and aluminium businesses should
also register improved performance given strong TC/RCs and LME prices.
Upgrading estimates; maintain O-PF
We now consolidate all the Anglo-Zinc assets, upgrade HZL’s profits factoring in
higher silver output and build in higher margins in copper business. However, we
also build in further 3m delays in SEL’s units as well as higher fuels costs, which
limits the upgrade in consol EPS to 1% in FY12 and 17% in FY13. Higher zinc and
silver price forecasts could drive further upgrades. Target price stays unchanged
as SEL value drops and loan to VAL increases. We believe that delivery in SEL/
HZL is crucial for stock performance to improve further. O-PF.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong 4Q results
Sterlite’s 4Q results were strong with net profit rising 39% YoY – above
expectations – though we remain puzzled with the sharp QoQ rise in other
income. Margins expanded QoQ in all divisions helped by strong commodity
and by-product prices. FY12-13 should see strong profit growth boosted by
ramp-up of power capacities in SEL and Balco, metal and silver output in HZL,
full accretion of Anglo-Zinc and higher TC/RCs in copper business. A key
negative in the result was the disclosure that loan to VAL still stands at
Rs80bn, virtually unchanged from FY10. We are not hopeful of this money
coming back. We upgrade FY12 EPS 1% and FY13 EPS 17%. Maintain O-PF.
Impressive performance across divisions
Sterlite registered a sequential improvement in EBIT margins across divisions in
4Q. We are particularly impressed by performance in copper, where EBIT rose
54% QoQ helped by higher TC/RCs and by-product prices. Aluminium EBIT, too,
rose a strong 64% QoQ helped by higher LME prices. HZL’s performance was
impressive on all operating metrics (higher-than-expected production and a lower
QoQ rise in costs) with higher sales of silver-rich lead concentrate giving an added
boost to profits. The recently acquired assets of Anglo-Zinc are already making
their presence felt adding ~US$100m (~14%) to consol EBITDA. As a result, 4Q
consol EBITDA rose 44% YoY and came in 13% above estimates. Higher other
income, lower depreciation and lower tax rate resulted in a higher net profit beat
though we will seek clarity on the sharp QoQ rise in other income.
Multiple growth levers over FY12-13 even accounting for project delays
Even accounting for project delays, the power units in Sterlite Energy and Balco
will make a big delta to consol profits over FY12-13. Accretion from Balco could be
higher if it obtains all clearances for its captive coal mine by mid-FY12, though we
are sceptical here. HZL’s ramp-up of silver output is poised to accelerate in FY12
at a time when silver prices are at multi-decade highs. The full impact of Anglo-
Zinc on earnings will be seen in FY12. Copper and aluminium businesses should
also register improved performance given strong TC/RCs and LME prices.
Upgrading estimates; maintain O-PF
We now consolidate all the Anglo-Zinc assets, upgrade HZL’s profits factoring in
higher silver output and build in higher margins in copper business. However, we
also build in further 3m delays in SEL’s units as well as higher fuels costs, which
limits the upgrade in consol EPS to 1% in FY12 and 17% in FY13. Higher zinc and
silver price forecasts could drive further upgrades. Target price stays unchanged
as SEL value drops and loan to VAL increases. We believe that delivery in SEL/
HZL is crucial for stock performance to improve further. O-PF.
No comments:
Post a Comment