Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P a i n c o n t i n u e s …
Sterlite Technologies reported a dismal set of Q1FY12 results as the
company continues to feel pressure from the execution of low margin
orders in the power segment. Revenues at | 547 crore were up 11% YoY
(I-direct estimate: | 577 crore.). EBITDA margins continued to disappoint
at 5.5% (I-direct estimate: 8.3%) mainly led by low margin orders
executed in the power segment. Power segment EBITDA margins of 2.1%
were somewhat cushioned by expansion in telecom segment margins at
23.3%. Interest expenses, on the other hand, have risen sharply 207%
YoY. This coupled with weak operational margins led to PAT decline of
91% YoY and 49% QoQ. Earlier guidance of | 400 crore of EBITDA in
FY12E seems difficult given weaker than expected Q1FY12 performance.
ƒ Highlights of the quarter
Order backlog at | 2400 crore, up 9% QoQ provides reasonable visibility.
However, the performance in terms of operating margins and PAT growth
would only get reflected in H2FY12 when the low margin power order
gets depleted by Q2FY12. Volumes in the power and telecom segment
are in line with estimates for Q1FY12. However, margins of 2.3% in the
power segment spoiled the party. Hence, in spite of recovery in H2FY12,
the company will fall short of its earlier guidance for FY12E. We have not
tweaked the revenue projections as we expect the volume targets to be
achieved. However, at the same time, we have revised down the EBITDA
and PAT numbers owing to lower-than-expected margins in the power
segment and a sharp rise in borrowing costs.
V a l u a t i o n
The stock has continuously underperformed the broader markets owing
to repeatedly dismal quarterly results. The base guidance of | 400 crore
for FY12 seems difficult to achieve in the light of | 30 crore of EBITDA in
Q1FY12E, which has led us to revise down the EBITDA and PAT for FY12
and FY13E. The stock will currently languish till the performance of the
power segment picks up. Hence, we have reduced the target price from |
63 to | 54 and rate the stock as HOLD.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P a i n c o n t i n u e s …
Sterlite Technologies reported a dismal set of Q1FY12 results as the
company continues to feel pressure from the execution of low margin
orders in the power segment. Revenues at | 547 crore were up 11% YoY
(I-direct estimate: | 577 crore.). EBITDA margins continued to disappoint
at 5.5% (I-direct estimate: 8.3%) mainly led by low margin orders
executed in the power segment. Power segment EBITDA margins of 2.1%
were somewhat cushioned by expansion in telecom segment margins at
23.3%. Interest expenses, on the other hand, have risen sharply 207%
YoY. This coupled with weak operational margins led to PAT decline of
91% YoY and 49% QoQ. Earlier guidance of | 400 crore of EBITDA in
FY12E seems difficult given weaker than expected Q1FY12 performance.
ƒ Highlights of the quarter
Order backlog at | 2400 crore, up 9% QoQ provides reasonable visibility.
However, the performance in terms of operating margins and PAT growth
would only get reflected in H2FY12 when the low margin power order
gets depleted by Q2FY12. Volumes in the power and telecom segment
are in line with estimates for Q1FY12. However, margins of 2.3% in the
power segment spoiled the party. Hence, in spite of recovery in H2FY12,
the company will fall short of its earlier guidance for FY12E. We have not
tweaked the revenue projections as we expect the volume targets to be
achieved. However, at the same time, we have revised down the EBITDA
and PAT numbers owing to lower-than-expected margins in the power
segment and a sharp rise in borrowing costs.
V a l u a t i o n
The stock has continuously underperformed the broader markets owing
to repeatedly dismal quarterly results. The base guidance of | 400 crore
for FY12 seems difficult to achieve in the light of | 30 crore of EBITDA in
Q1FY12E, which has led us to revise down the EBITDA and PAT for FY12
and FY13E. The stock will currently languish till the performance of the
power segment picks up. Hence, we have reduced the target price from |
63 to | 54 and rate the stock as HOLD.
No comments:
Post a Comment