Sterlite Technologies- Waiting for positive vibes, Maintain HOLD :Emkay

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Sterlite Technologies

Waiting for positive vibes, Maintain HOLD

HOLD

CMP: Rs50                                        Target Price: Rs51

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n     Q1FY12 profit of Rs52mn, down 90.6% yoy (significantly below our est. of Rs138mn). Led by lower revenue growth & dented EBITDA margin in both Power and Telecom biz

n     Low margin orders in power further squeezed margins to 2.1% v/s 13.2% in Q1FY11 & 2.8% in Q4FY11. Drop in realization dented telecom margins to 23.3% v/s 28.8% in Q1FY11

n     Cut EPS by 26.2%/ 15.0% for FY12E/13E to Rs4.0/Rs5.6 due to poor margin trend and significant inc. in interest cost

n     Maintain HOLD with revised TP of Rs51 (earlier Rs54). Valuation at 12.7x and 8.9x on our EPS estimate of Rs4.0/5.6 for FY12E/13E