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Sterlite's 3Q11 EBITDA was 7% above our estimate. All business segments barring power
reported robust earnings. Power's ramp-up has been slower than we expected due initial start-up
glitches. We now incorporate earnings from Anglo American's zinc asset and adjust cash
balances in our forecasts.
3QFY11 EBITDA was 7.4% above our estimate
Sterlite reported 3QFY11 EBITDA of Rs19.4bn (+10% yoy and 32% qoq), 7.4% above our
estimate on an adjusted (for Skorpion) basis. PBT at Rs21.4bn (+14% yoy and 13% qoq) was
0.3% higher than our estimate. Zinc, Copper and Aluminium reported robust earnings with
EBITDA of Rs14.9bn (+9% yoy), Rs2.3bn (+21% yoy) and Rs1.6bn (+41% yoy) respectively.
Power business EBITDA at Rs0.4bn (-70%yoy) suffered from a sharp dip in spot power tariffs of
47% yoy.
We revisit our key assumptions; add Zinc earnings, reduce Power
We have incorporated the following changes to our model: i) Added earnings from all of Anglo
American’s zinc assets, which include, Skorpion, Lisheen and Black Mountain, to our estimates,
which raises our valuation of the Zinc business from Rs87/share to Rs126/share. ii) Given the
slower than expected ramp-up of the power generation capacities, we have lowered our power
generation forecast from 15.7bn units to 8.4bn units for FY12. However, as we value the Power
business on a DCF basis, our valuations for the power business are only marginally affected. As
a result, we lower our FY12/13 net earnings by 6%/13%.
Minority government stake remains. Adjust valuations. Maintain Buy recommendation
Media reports (eg CNBC) indicate that the arbitration panel set up to review the call option for the
proposed purchase of BALCO’s minority government stake has held the call option to be invalid.
This could reduce the possibility of unlocking value and freeing up cash locked in Hindustan Zinc.
Following adjustments to our earnings model, we revise our SoTP-based target price to
Rs207/share from Rs201/share.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Sterlite's 3Q11 EBITDA was 7% above our estimate. All business segments barring power
reported robust earnings. Power's ramp-up has been slower than we expected due initial start-up
glitches. We now incorporate earnings from Anglo American's zinc asset and adjust cash
balances in our forecasts.
3QFY11 EBITDA was 7.4% above our estimate
Sterlite reported 3QFY11 EBITDA of Rs19.4bn (+10% yoy and 32% qoq), 7.4% above our
estimate on an adjusted (for Skorpion) basis. PBT at Rs21.4bn (+14% yoy and 13% qoq) was
0.3% higher than our estimate. Zinc, Copper and Aluminium reported robust earnings with
EBITDA of Rs14.9bn (+9% yoy), Rs2.3bn (+21% yoy) and Rs1.6bn (+41% yoy) respectively.
Power business EBITDA at Rs0.4bn (-70%yoy) suffered from a sharp dip in spot power tariffs of
47% yoy.
We revisit our key assumptions; add Zinc earnings, reduce Power
We have incorporated the following changes to our model: i) Added earnings from all of Anglo
American’s zinc assets, which include, Skorpion, Lisheen and Black Mountain, to our estimates,
which raises our valuation of the Zinc business from Rs87/share to Rs126/share. ii) Given the
slower than expected ramp-up of the power generation capacities, we have lowered our power
generation forecast from 15.7bn units to 8.4bn units for FY12. However, as we value the Power
business on a DCF basis, our valuations for the power business are only marginally affected. As
a result, we lower our FY12/13 net earnings by 6%/13%.
Minority government stake remains. Adjust valuations. Maintain Buy recommendation
Media reports (eg CNBC) indicate that the arbitration panel set up to review the call option for the
proposed purchase of BALCO’s minority government stake has held the call option to be invalid.
This could reduce the possibility of unlocking value and freeing up cash locked in Hindustan Zinc.
Following adjustments to our earnings model, we revise our SoTP-based target price to
Rs207/share from Rs201/share.
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