STERLITE TECH – Strong order book & Promotors Removes 100% Pledged shares

STERLITE TECHNOLOGIES

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 👇👇

https://wealthcreatures.com/2018/11/12/stay-away-from-stock-where-promotors-have-pledged-huge-quantity-of-shares/

But Now Promoters have Removed 100% Of Pledge On Companies Shares.

So Now one can look at company

Company Background:

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.

Financial Highlights:

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
H2FY20.

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.

17 thoughts on “STERLITE TECH – Strong order book & Promotors Removes 100% Pledged shares

  1. sir,
    i am having associated alcohol. i went thro quaterly result. the figures as below
    sales 137 cores( 31/3/2020) aganist 124 crores( 31/3/2019) net profit is 107 cr vs 57 cr -3 months comparision
    to educate my self pl help me . i want to know why the shares have fallen even profit is double or is it profit taking. i want to know i should read any more details beyond sales and profit please explain in this case
    prasad

    Like

    1. Cummins is on Huge downtrend from 2015 from levels of 1150 currently TRADING BWT 370 To 410.
      One should exit From This stock and Invest in growth oriented stocks like Deepak Nitrite,SW solar, Visaka Inds, Delta Corp, G.m BREWERIES, Aarti DRUGS, IOL CHEMICALS To name a few list is very big.
      If your view is LONGTERM Divide 50% in Largecaps like RIL, HDFC, Tcs and 50% fund in MIDCAPs. Huge wealth can be created in next 3 to 5 years. If you hold Quality stocks with growth. For rates of our MIDCAP picks refer our articles.

      Liked by 2 people

  2. hank you for your advise. are you advise the price when it dips or the level,i have not understood meaning of radar
    prasad

    Like

    1. Buy On DIps in SIP ( systematic investment plan)
      For example is stock is trading at 100 add 25% of desired Quantity @ 100 and than at 25% at 10% fall say around 90.
      Bal 25% qty at 80 to 85. In this way you can get very good price and Risk reward becomes favourable in LONGTERM.

      Like

      1. Thank you for your advise. are you advise the price when it dips or the level,i have not understood meaning of radar
        prasad

        Like

  3. iam a retired person and some funds iam park say 30 % .iam very much appricated your recommendation,but my problem is your recommendation comes to email it will be 10 % up pl advise or is it possible to send earlier say 1 hr advance or can you give your mobile no so that i can talk
    prasad

    Liked by 1 person

    1. Deepak Nitrite support at 280 level. If it closes today below 280 then Bearish. Prices of Phenol and acetone have decline 25% which is dragging the stock down from 2 days.international Prices have Come down by 30-35% due to low demand and high Capacity.

      Like

    2. We Had Told Deepak Nitrite was Technically in over bought positive above 335 & Technically Stock had to come Down.We expect Consolidation bwt 250-260 zone & only After FY20 Q1 RESULTS stock Should Move Higher levels.If you are long term investor No Need To worry.

      Like

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