Sterlite Technologies Earnings cut by 22%, Downgrade to hold : EMkay

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Sterlite Technologies

Earnings cut by 22%, Downgrade to hold

HOLD

CMP: Rs 59                                       Target Price: Rs 54

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n     Q4FY11 profit of Rs103mn, down 85.7% yoy (significantly below our est. of Rs425mn). Decline was led by dented EBITDA margin in both Power and Telecom biz

n     Low margin orders in power further squeezed margins to 2.8% v/s 12.0% yoy. Drop in realization dented Telecom margins to 20.6% v/s 31.6% in Q4FY10

n     Cut FY12E EPS by 22% to Rs5.4 due to poor margin trend and rise in all below line items

n     Downgrade rating to HOLD (from BUY) and target price to Rs54 (from Rs68 earlier) post significant disappointment and poor profitability trend