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D i s a p p o i n t i n g o n c e a g a i n…
Sterlite Technologies reported disappointing Q3FY12 results as revenues
came below our expectations at | 664 crore (I-direct estimate: | 755
crore). This was mainly on the back of a 3% decline in power conductor
volumes. Though reported EBITDA was in line at | 56 crore (EBITDA
margins for Q3FY12 stood at 8%), stabilisation issues on the expanded
fibre capacity led to subdued telecom segment margins. Consequently,
higher interest costs (up 80% YoY) and adverse impact on a merger of
Sterlite Infratech (9 month loss of | 6 crore) impacted PAT, which came in
at | 9 crore, down 45% YoY. Going ahead we believe, a miss in volume
guidance, high interest & depreciation costs will lead to earnings
downgrade for FY12 and FY13.
ƒ Highlights of the quarter
The order backlog for Q3FY12 stood at | 2400 crore. The power segment
comprises 90% of the overall backlog as the segment witnessed order
inflows to the tune of | 664 crore. In the power segment, orders from
PGCIL stood at | 1200 crore. During Q3FY12, volumes declined 3% YoY
to 32,600 MT and EBITDA/tonne improved to | 7980/tonne, up 23% YoY.
In the telecom segment, volumes for optical fibre and optical fibre cable
stood at 2.9 million fibre km (fkm) and 0.9 mn fkm, respectively.
Stabilisation issues on the expanded capacity marred margins in the
telecom segment as it remained flattish QoQ at 15.9%. On infrastructure
projects, the management expects equity infusion of | 1,000 crore by
FY14 (| 220 crore equity infused till Q3FY12) and expects all projects to
get commissioned by FY14.
V a l u a t i o n
At the CMP of | 37, the stock is trading at 31x and 11x on FY12E and
FY13E EPS, respectively. Though we believe FY13 will look better for the
company, at the same time, we would wait for the performance delivery
to happen before getting positive. We value the company at 10x its FY13E
EPS and arrive at a price target of | 31 and downgrade the stock to SELL
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D i s a p p o i n t i n g o n c e a g a i n…
Sterlite Technologies reported disappointing Q3FY12 results as revenues
came below our expectations at | 664 crore (I-direct estimate: | 755
crore). This was mainly on the back of a 3% decline in power conductor
volumes. Though reported EBITDA was in line at | 56 crore (EBITDA
margins for Q3FY12 stood at 8%), stabilisation issues on the expanded
fibre capacity led to subdued telecom segment margins. Consequently,
higher interest costs (up 80% YoY) and adverse impact on a merger of
Sterlite Infratech (9 month loss of | 6 crore) impacted PAT, which came in
at | 9 crore, down 45% YoY. Going ahead we believe, a miss in volume
guidance, high interest & depreciation costs will lead to earnings
downgrade for FY12 and FY13.
ƒ Highlights of the quarter
The order backlog for Q3FY12 stood at | 2400 crore. The power segment
comprises 90% of the overall backlog as the segment witnessed order
inflows to the tune of | 664 crore. In the power segment, orders from
PGCIL stood at | 1200 crore. During Q3FY12, volumes declined 3% YoY
to 32,600 MT and EBITDA/tonne improved to | 7980/tonne, up 23% YoY.
In the telecom segment, volumes for optical fibre and optical fibre cable
stood at 2.9 million fibre km (fkm) and 0.9 mn fkm, respectively.
Stabilisation issues on the expanded capacity marred margins in the
telecom segment as it remained flattish QoQ at 15.9%. On infrastructure
projects, the management expects equity infusion of | 1,000 crore by
FY14 (| 220 crore equity infused till Q3FY12) and expects all projects to
get commissioned by FY14.
V a l u a t i o n
At the CMP of | 37, the stock is trading at 31x and 11x on FY12E and
FY13E EPS, respectively. Though we believe FY13 will look better for the
company, at the same time, we would wait for the performance delivery
to happen before getting positive. We value the company at 10x its FY13E
EPS and arrive at a price target of | 31 and downgrade the stock to SELL
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