Sterlite Industries : Cost escalation continues ACCUMULATE :Emkay

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Sterlite Industries

Cost escalation continues

ACCUMULATE

CMP: Rs 116                                       Target Price: Rs 162

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n     Q2FY12 revenue at Rs 102 bn with a growth of 68% YoY and 3% QoQ was in line with estimates; Weak INR and volume growth have been the key drivers for higher revenue

n     EBITDA at Rs 24.8 bn, despite a YoY growth of 62% fell 10% on QoQ on account of higher CoP in Aluminium and power businesses. INR depreciation also played spoil sport

n     Higher interest costs, lower than expected other income and losses in aluminium business during the quarter restricted the PAT at Rs 10 bn, flat YoY and down 39% QoQ

n     Barring zinc, subdued performance of other businesses and rising costs continue to be a worry. Revising our SOTP target price to Rs 162/ share; Maintain Accumulate