Angel Broking is bullish on Sterlite Industries and has recommended buy rating on the stock with a target of Rs 205 in its July 25, 2011 research report.
“Sterlite Industries’ (Sterlite) consolidated net revenue for 1QFY2012 stood at Rs 9,824cr, slightly below our estimate of Rs 10,200cr. Net profit at Rs 1,640cr was also slightly below our estimate of Rs 1,700cr. For 1QFY2012, Sterlite’s consolidated net sales grew by 65.8% yoy to Rs 9,824cr. Top-line growth was aided by higher metal sales volume as well as metal prices. Further, merchant power sales during the quarter increased by 244.2% yoy to 1,652mn units. However, the company’s power tariff declined by 28.7% yoy to Rs 3.6/unit.”
“Strong EBITDA growth aided by rising prices: EBITDA margin expanded by 358bp yoy to 28.1% because of higher realisations across most product categories despite cost increases witnessed in a) the aluminium segment on account of higher alumina and power costs and b) the zinc segment due to higher stripping ratio and royalty costs. Consequently, EBITDA increased by 84.2% yoy to Rs 2,758cr. Net profit for the quarter increased by 62.6% yoy to Rs 1,640cr, slightly below our estimate of Rs 1,700cr.”
“Sterlite is currently trading at 7.9x and 5.3x FY2012E and FY2013E EV/EBITDA, respectively. We expect Sterlite to benefit from the expansion of zinc-lead smelting capacity during FY2012–13. Furthermore, Sterlite’s expansion in the silver-rich Sindesar Khurd mine should result in robust bottom-line growth. We maintain our Buy rating on the stock with an SOTP-based target price of Rs 205,” says Angel Broking research report
Source:moneycontrol.com
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