Sesa Sterlite Ltd. |Q2FY15 Result Update | Mixed set of performance |Maintain buy rating on the stock with target price of Rs. 378 :: IndiaNivesh

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 Though revenue and EBITDA was in line with consensus, Adjusted PAT stood
at Rs. 14.9 bn slightly below consensus of Rs. 15.52 bn due to lower other
income(down by 24% YoY).
 During Q2FY15, exceptional items of Rs. 902 mn includes Rs 454.6 mn provision
recognized in respect of expenditure incurred on three coal blocks allotted to
the company and its subsidiary due to cancellation of coal blocks by the
supreme court and Rs 447.7 mn incurred on VRS expenses at its subsidiary.
 Top-line increased by 8% QoQ to Rs. 194.48 bn, in line with consensus of
Rs. 194.83 bn. Higher revenue from by Copper, Zinc and aluminium business
was offset by lower Oil & Gas and power segment revenue.
 Revenue from Aluminum business grew 23.6% YoY and 9.4% QoQ on account
of higher sales volume coupled with rise in metal prices. The Lanjigarh alumina
refinery which has recommenced operations in July 2014 has ramped up well
and produced 226,000 tonnes at 90% utilization rate in Q2FY15. LME
Aluminum prices grew by 10.5% QoQ and 11.6% YoY to USD 1987/MT.
 Copper cathode production in India was higher by 51% QoQ and 22% YoY at,
100000 tonnes, as production from Tuticorin smelter resumed. In Q1FY15, it
was under 23-day maintenance shutdown. However Australian copper
business affected significantly due to disruption of operation caused by an
accident. It can be reopened after FY16 if it is found to be technically and
economically feasible.
 Revenues from Zinc India business were up by 6.4% YoY and 26.8% QoQ on
account of higher LME prices coupled with increase in volume.
 At Karnataka, the company produced 300,000 tonnes of iron ore in Q2 FY15.
However, since August 2014, mine is not producing or selling ores as it is
awaiting forest clearance and mining lease renewal, which is expected to be
received in Q3FY15. At Goa, the company is working with state government
to resume mining in Q4 FY15.

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