Sterlite Technologies Telecom margins take a hit, Maintain HOLD :Emkay,

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Sterlite Technologies

Telecom margins take a hit, Maintain HOLD

HOLD

CMP: Rs 38                                       Target Price: Rs 47

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n     Revenue at Rs7.0bn, up 38.8% yoy led by strong growth from power segment. EBITDA at Rs504mn declined 44.3% yoy with EBITDA margin at 7.1%. Telecom margin down 1318bps yoy

n     PAT at Rs126mn was down 78.0% yoy (our est. of Rs140), led by 44.4% and 41.8% decline in EBITDA in Power & Telecom segment, respectively followed with high interest cost

n     Cut EPS by 26.9%/ 8.0% for FY12E/13E to Rs2.9/Rs5.2 due to margin pressure in telecom segment pertaining to capacity expansion

n     Maintain HOLD with revised TP of Rs47 (earlier Rs51). Valuation at 13.2x and 7.4x on our EPS estimate of Rs2.9/5.2 for FY12E/13E