CMP – 173
MARKET CAP – 6892cr
52wk HIGH/LOW – 400/147
ORDER BOOK – 10516cr
We Had Given Sell Call & Stay Away from Sterlite Tech in one of Our Article.Stock had corrected Almost 63% From those levels
OLD LINK 👇👇
But Now Promoters have Removed 100% Of Pledge On Companies Shares.
So Now one can look at company
Incorporated in 1988, Pune-based Sterlite Technologies Ltd (STL) is a global leader in end-to-end data network solutions. It is a subsidiary of Twin Star Overseas Ltd. It designs and deploys high-capacity converged
fibre and wireless networks.
It expertise ranges from optical fibre and cables to hyper-scale network design and deployment and network software. It has partnered with global telecom companies, cloud companies, citizen networks and large enterprises to design, build and manage their cloud-native software-defined networks.
Sterlite has demonstrated a strong growth trajectory in the past couple of
years driven by strong traction in global fibre demand. The recent China
Mobile pricing fiasco, however, has clouded overall sentiments & Also promoter has very high % of pledge shares.
STL reported a good set of numbers for Q4FY19 on the back of higher contribution from its services and solutions business.
Revenue zoomed 112% YoY and 34% QoQ to Rs.17912 million. EBITDA grew 43% YoY and 7% QoQ to Rs.3151 million while margin declined to 18% (down 800 bps YoY and 400 bps QoQ). Its order book remains robust at Rs.105160 million, which is twice its FY19 revenue and gives good revenue visibility. PAT jumped 47% YoY and 13% QoQ to Rs.1652 million and its EPS stood at Rs.4.11.
STL’s FY19 performance was equally good on account of higher fibre deployment across Europe, India and other parts of the world such as Latin America and the Middle East. The demand in China is subdued, which however accounts for less than 5% of the overall business. Its services business was driven by national broadband initiatives like “Bharat –Net” apart from state initiatives like “Smart Cities”
Aurangabad plant to be operational in Q2FY20
Capex of 500-550 crore in FY20: The management indicated that current optical fibre capacity is at 40 mn fKm while the company is well on track to achieve its earlier guided timelines for 50 mn fKm fibre and 33 mn fKm fibre cable capacity as on June 2019 and June 2020. The management also informed that meaningful revenues are expected from expanded capacity from
Company has guided 500 to 550cr capex, including maintenance capex in FY20. As per the management, capex is expected to moderate, in the range of 200-250 crore in FY21
Order Book & Debt :
The order book is at 10,516cr as on FY19.Patent portfolio up from 234 to 271.Net Debt has increased from 884cr in FY18 to1,733cr in FY19 and the company declared a dividend of Rs.3.50 per share in FY19
China Factor: Prices in china has fallen more then 35%
Although Sterlite has fixed contract but there is renegotiation clause attached and can negotiate price in 6-12 Months.
Conclusion: We believe that STL is well placed to capitalise on the network creation opportunity as telecom companies, cloud companies and new digital infrastructure players create hyper-scale networks and data network solutions for mobility, last-mile access, long-haul connectivity, network modernization, data centres, etc. Moreover, the roll out of 5G
will boost the demand for optic fibre and fibre cable.
Currently Stock is available at EPS of Rs 13.83 And trades at Multiple of approx 12.5.
In short term we could see stock moving towards 200.
A P/E multiple of 15 Times on FY20 Expected EPS of Rs.18 may take its share price to Rs.270 in the next 12 to 18 months.
KEY RISK : Potential Pricing Pressure going forward.
Disc – All views expressed are personal and only for Educational and study purpose only. Consult your financial advisor before investing based on above article.