Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P e r f o r m a n c e i m p a c t e d b y h i g h e r i n p u t c o s t s …
Sterlite Industries’ (SIL) Q2FY12 results were broadly below our
expectation wherein higher input costs led to a decline in EBITDA
margins. The topline came at | 10133.8 crore (our estimate: | 9629.5
crore), which was 67% higher YoY and 3% higher QoQ. On the back of
higher input costs, the EBITDA margin, however, declined steeply by 350
bps YoY and 60 bps YoY to 24.5% (our estimate: 26.8%). The subsequent
EBITDA stood at | 2482 crore (our estimate: | 2580 crore), which was
62% higher YoY but 10% lower QoQ. The ensuing reported PAT stood at
| 997.8 crore (our estimate - | 1529.5 crore), which was 1% lower YoY
and 37% lower QoQ. The reported PAT during the quarter under review
was dented by foreign currency losses. Due to unprecedented
depreciation of the INR, the net impact of foreign currency exchange
fluctuations during the quarter resulted in a loss of | 466 crore.
ƒ Subdued performance by aluminium and power businesses
The subdued performance of the aluminium and power businesses
during Q2FY12 impacted the overall performance of SIL. In the
aluminium business, during the quarter under review, Balco
reported a loss to the tune of | 17 crore while Vedanta Aluminium
(VAL) reported a loss of | 243 crore (SIL’s share). The subdued
performance was due to a steep rise in the cost of production
primarily on the back of higher coal costs. The energy business
reported a sharp decline in EBIT margins. During the quarter, the
EBIT margin further declined to ~8.5% due to higher input cost
(coal), from 14.08% in Q1FY12 and 34.8% in Q2FY11.
V a l u a t i o n
On the back of an uncertain global environment and concerns with regard
to higher input costs, we have changed our assumptions for LME prices
and cost of production (CoP) and accordingly have reduced our target
multiples. At the CMP of | 124, after adjusting for LME volatility in our
estimates, the stock is trading at FY13E PE of 6.9x and FY13E EV/EBITDA
of 2.8x on a consolidated basis. We have valued the stock on an SOTP
basis and reduced our target price to | 135. We have assigned a HOLD
recommendation to the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P e r f o r m a n c e i m p a c t e d b y h i g h e r i n p u t c o s t s …
Sterlite Industries’ (SIL) Q2FY12 results were broadly below our
expectation wherein higher input costs led to a decline in EBITDA
margins. The topline came at | 10133.8 crore (our estimate: | 9629.5
crore), which was 67% higher YoY and 3% higher QoQ. On the back of
higher input costs, the EBITDA margin, however, declined steeply by 350
bps YoY and 60 bps YoY to 24.5% (our estimate: 26.8%). The subsequent
EBITDA stood at | 2482 crore (our estimate: | 2580 crore), which was
62% higher YoY but 10% lower QoQ. The ensuing reported PAT stood at
| 997.8 crore (our estimate - | 1529.5 crore), which was 1% lower YoY
and 37% lower QoQ. The reported PAT during the quarter under review
was dented by foreign currency losses. Due to unprecedented
depreciation of the INR, the net impact of foreign currency exchange
fluctuations during the quarter resulted in a loss of | 466 crore.
ƒ Subdued performance by aluminium and power businesses
The subdued performance of the aluminium and power businesses
during Q2FY12 impacted the overall performance of SIL. In the
aluminium business, during the quarter under review, Balco
reported a loss to the tune of | 17 crore while Vedanta Aluminium
(VAL) reported a loss of | 243 crore (SIL’s share). The subdued
performance was due to a steep rise in the cost of production
primarily on the back of higher coal costs. The energy business
reported a sharp decline in EBIT margins. During the quarter, the
EBIT margin further declined to ~8.5% due to higher input cost
(coal), from 14.08% in Q1FY12 and 34.8% in Q2FY11.
V a l u a t i o n
On the back of an uncertain global environment and concerns with regard
to higher input costs, we have changed our assumptions for LME prices
and cost of production (CoP) and accordingly have reduced our target
multiples. At the CMP of | 124, after adjusting for LME volatility in our
estimates, the stock is trading at FY13E PE of 6.9x and FY13E EV/EBITDA
of 2.8x on a consolidated basis. We have valued the stock on an SOTP
basis and reduced our target price to | 135. We have assigned a HOLD
recommendation to the stock.
No comments:
Post a Comment