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Sterlite Industries (India)
Limited
India Zinc F1Q12 Results:
Production Disappoints
Quick comment: We maintain our OW stance on
Sterlite as we feel the current stock price is not reflecting
Sterlite’s growth opportunities and earnings trajectory
from here properly. However, we acknowledge the
regulatory and legal hurdles for the stock near term.
EBITDA 13% below MSe: Sterlite’s Indian Zinc division
reported EBITDA of Rs15.6bn (up 57% YoY but down
19% QoQ) and 13% below MSe mainly because of
lower mined zinc production than we expected.
What we did not like: 1) Mined metal production was
188kt, up 3.6% YoY but down 18.5% QoQ. The decline
was due primarily to an unplanned shutdown of the
Rampura Agucha mine. 2) Silver production was
46,783Kgs, up 8.0% YoY but down 6.1% QoQ on lower
zinc production.3) Zinc realizations per ton were higher
by 10% YoY but down 6.3% QoQ due to the lower LME
prices of zinc in the first quarter. 4) Zinc metal cost
without royalty increased 11.5% QoQ to US$874/ton
due to higher raw material costs and volume loss at the
Rampura Agucha mine.
What we liked: 1) Refined zinc production was up
17.3% YoY although flat QoQ at193kt, indicating a
higher contribution from the Dariba Hydro smelter
operating at peak capacity.2) Zinc sales volumes were
higher by 16.5% YoY and marginally lower by 1.5% QoQ,
indicating a reduction in inventory levels. 3) Silver
realization continued to improve, higher by 84.4% YoY
and 13.3% QoQ due to higher benchmark silver prices.
Expansion project updates: Commissioning of the
100kt lead smelter at Dariba is expected to be
completed in mid-F2Q12. This smelter will feed the 350-
ton silver refinery, which is expected to produce saleable
silver by the end of F2Q12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sterlite Industries (India)
Limited
India Zinc F1Q12 Results:
Production Disappoints
Quick comment: We maintain our OW stance on
Sterlite as we feel the current stock price is not reflecting
Sterlite’s growth opportunities and earnings trajectory
from here properly. However, we acknowledge the
regulatory and legal hurdles for the stock near term.
EBITDA 13% below MSe: Sterlite’s Indian Zinc division
reported EBITDA of Rs15.6bn (up 57% YoY but down
19% QoQ) and 13% below MSe mainly because of
lower mined zinc production than we expected.
What we did not like: 1) Mined metal production was
188kt, up 3.6% YoY but down 18.5% QoQ. The decline
was due primarily to an unplanned shutdown of the
Rampura Agucha mine. 2) Silver production was
46,783Kgs, up 8.0% YoY but down 6.1% QoQ on lower
zinc production.3) Zinc realizations per ton were higher
by 10% YoY but down 6.3% QoQ due to the lower LME
prices of zinc in the first quarter. 4) Zinc metal cost
without royalty increased 11.5% QoQ to US$874/ton
due to higher raw material costs and volume loss at the
Rampura Agucha mine.
What we liked: 1) Refined zinc production was up
17.3% YoY although flat QoQ at193kt, indicating a
higher contribution from the Dariba Hydro smelter
operating at peak capacity.2) Zinc sales volumes were
higher by 16.5% YoY and marginally lower by 1.5% QoQ,
indicating a reduction in inventory levels. 3) Silver
realization continued to improve, higher by 84.4% YoY
and 13.3% QoQ due to higher benchmark silver prices.
Expansion project updates: Commissioning of the
100kt lead smelter at Dariba is expected to be
completed in mid-F2Q12. This smelter will feed the 350-
ton silver refinery, which is expected to produce saleable
silver by the end of F2Q12.
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