Sterlite Technologies Operational efficiencies yet to come HOLD ::Emkay

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Sterlite Technologies

Operational efficiencies yet to come

HOLD

CMP: Rs38                                        Target Price: Rs34

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n     Revenue at Rs6.6bn, up 14.6% yoy (our est. of Rs7.3bn). EBITDA at Rs522mn grew 21.2% yoy with EBITDA margin at 7.9%. Telecom margin declined 830bps yoy to 15.9%

n     PAT at Rs94mn was down 44.6% yoy (our est. of Rs120mn), led by Rs66mn of interest & depreciation due to merger of ‘Sterlite Infra-Tech Ltd’ (wholly owned subsidiary)

n     Cut EBITDA by 27.1%/ 8.9% for FY12E/13E due to continued margin pressure in telecom segment pertaining to capacity expansion

n     Maintain HOLD with revised TP of Rs34 (earlier Rs47). Valuation at 28.4x and 9.0x on our EPS estimate of Rs1.3/4.2 for FY12E/13E