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RECO : BUY TP : Rs68
Investment Rationale
§ Vedanta group promoted Sterlite Technologies is the largest manufacturer of power conductors in India (capacity
of 160,000 MT) and only Indian manufacturer for optic fiber (capacity 12mn fkms).
§ While demand environment for both power and telecom sector’ remains strong, growth would be led by brown
field expansion in power conductors (to 200,000 MT), optic fiber (20mn fkms) and optic cables (6mn to 10mn
fkms)
§ As on Dec 10, total order book stood at Rs 17bn, recently it has won orders worth Rs4bn from PGCIL. Provides
adequate earning visibility in near term
§ STL has won 3 UMPTP projects worth RS40bn on Build, Own, Operate and Maintain (BOOM) basis. The
projects would get operational by end of FY14E, giving an additional revenue stream to the company
§ We estimate Revenue, EBIDTA and PAT CAGR of 11.9%, 11.2% and 11.8% respectively over FY10-13E
Valuations
§ At CMP of Rs58,stock is available at an attractive valuation of 13.3x EPS of Rs 4.4 for FY11E and 8.6x EPS of
Rs 6.8 for FY12E. The stock has seen a steep price correction in recent past due to disappointing performance
in Q3FY11, owing to delays in order inflow from PGCIL coupled with realization drop in optic fibre business.
However, we believe the worst is behind us and considering the opportunity from the transmission segment
would also increase the revenue stream for the company going forward
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RECO : BUY TP : Rs68
Investment Rationale
§ Vedanta group promoted Sterlite Technologies is the largest manufacturer of power conductors in India (capacity
of 160,000 MT) and only Indian manufacturer for optic fiber (capacity 12mn fkms).
§ While demand environment for both power and telecom sector’ remains strong, growth would be led by brown
field expansion in power conductors (to 200,000 MT), optic fiber (20mn fkms) and optic cables (6mn to 10mn
fkms)
§ As on Dec 10, total order book stood at Rs 17bn, recently it has won orders worth Rs4bn from PGCIL. Provides
adequate earning visibility in near term
§ STL has won 3 UMPTP projects worth RS40bn on Build, Own, Operate and Maintain (BOOM) basis. The
projects would get operational by end of FY14E, giving an additional revenue stream to the company
§ We estimate Revenue, EBIDTA and PAT CAGR of 11.9%, 11.2% and 11.8% respectively over FY10-13E
Valuations
§ At CMP of Rs58,stock is available at an attractive valuation of 13.3x EPS of Rs 4.4 for FY11E and 8.6x EPS of
Rs 6.8 for FY12E. The stock has seen a steep price correction in recent past due to disappointing performance
in Q3FY11, owing to delays in order inflow from PGCIL coupled with realization drop in optic fibre business.
However, we believe the worst is behind us and considering the opportunity from the transmission segment
would also increase the revenue stream for the company going forward
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