Performs well…. • Sesa Sterlite :: ICICI Securities, report

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

�

-->
Performs well…. • Sesa Sterlite reported a good set of Q3FY15 numbers wherein topline, EBITDA and PAT were higher than our estimates • Topline for the quarter came in at | 19218.9 crore, down 1.7% QoQ (our estimate: | 18237.8 crore) • The EBITDA came in at | 6146.6 crore, down 2.2% QoQ (EBITDA margin 32.0%) (our estimate: | 5563.2 crore, EBITDA margin: 30.5%) • Reported PAT came in at | 1587.5 crore and was higher than our estimate of | 1541.5 crore • Aluminium operations (Jharsuguda) performed well during the quarter. Jharsuguda aluminium EBITDA surprised on account of continued high premiums over LME. Cost of alumina and aluminium showed a notable moderation in VAL, driven by lower e-auction coal prices and lower imported coal prices Merger creates most diversified mineral resource company in India In CY12, the promoter group of Sesa Goa (Vedanta Plc) announced the group consolidation exercise in India wherein subsequently in CY13 Sterlite Industries was again merged into Sesa Goa with the new entity being Sesa Sterlite. Sesa Sterlite is now the single entity holding all business interest of the group in India including Cairn India, Hindustan Zinc, Balco, Vedanta Aluminium, Sterlite Energy, iron ore segment, copper operations along with Zinc International. Three Sesa Goa shares were issued for every five existing Sterlite shares (merger ratio). The merger finally became effective from August 28, 2013. Zinc, oil & gas business - feather in the cap The company’s domestic zinc business (Hindustan Zinc) and oil & gas business (Cairn India) on a sustainable basis have reported a robust performance with healthy EBITDA margins, thereby generating good cash flows for the group. With well charted growth plans and capacity augmentation in the offing, the aforesaid businesses are expected to deliver robust performances for the group, going forward. Aluminium business; higher premiums augur well After hitting a multi-year low of US$1633.5/tonne during February 2014, aluminium prices have bounced back and are moving in an upward direction. Furthermore, the physical ingot premium has remained at elevated levels at ~US$ 450-475/tonne, which augurs well for the company. Improvement in LME base metal prices augurs well We have a positive view on the company’s domestic zinc business (HZL) and oil & gas business (Cairn India) on account of strong underlying fundamentals. However, we have a cautious view on Sesa Sterlite on the back of a huge debt pile and a skewed EBITDA profile. We have valued the company using SOTP valuation and arrived at a target price of | 213. We have a HOLD rating on the stock

LINK
http://content.icicidirect.com/mailimages/IDirect_SesaSterlite_Q3FY15.pdf