IDFC Securities - Sterlite Technologies (STLTECH) Sterlite Technologies Q1FY19 results (Outperformer) - In line quarter; Strong growth in order book

Report

IDFC Securities

Sterlite Technologies' Q1FY19 results (Outperformer) - In line quarter; Strong growth in order book

Q1FY19 result highlights

In line operating performance: Revenue of Rs8.7bn (IDFCe: Rs9.09bn) was up 3.6% qoq and +17.8% yoy driven by strong volumes in product business. Revenues were 3.6% below our estimates due to negative surprise in software business in Q1FY19. EBITDA margins improved by 190bp qoq to 27.9% (IDFCe: 24.9%) driven by strong growth in products business. Reported EBITDA and net profit of Rs2.44bn and Rs1,238m were 8.3% & 13.0% respectively ahead than our estimates.
Order book improves growth visibility: Order book was up 92% yoy to Rs60.3bn in Q1FY19 (Q4FY18: Rs.40.9bn) led by strong growth of 20.6% QoQ, 200% YoY in product business. Higher product business mix (82% of book) improves growth visibility and will help them to maintain higher EBITDA margins. Services & Software order book would continue to be lumpy with final awards awaited. Management expects strong growth in 2HFY19 with the help of execution of Navy contract.
Recent acquisition bodes well with the strategy: The acquisition will help deeper penetration in European market for SOTL and since last 2 years SOTL is focusing a lot on European geography to reduce dependence on China. In FY17, Europe revenues accounted for 11% of the total revenue which increased to 27% in FY18. This quarter domestic business showed a positive surprise on account of strong demand from private telecom companies. Management expects a strong growth from exports business in coming years.

Key positives: Strong order book

Key negatives: Decline in exports & services revenue

Impact on financials: FY19 EPS upgraded by 4.2% and FY20E EPS remains unchanged.

Valuations & view

SOTL reported in line operating performance with continued traction in product business order book. Management commentary remained optimistic with increasing demand for fiber across domestic and international markets. Management expects 2HFY19 to be strong as compared to 1HFY19 on account of strong growth from exports business & services business. Strong growth visibility (27%/33% EBITDA/EPS CAGR over FY18-20E) and healthy RoCE (27% in FY20E) should help SOTL sustain premium valuations (24x one-year forward PE). We maintain Outperformer rating and target price of Rs370 (25x FY20E EPS).

20/07/2018 6 EN

Underlying

Sterlite Technologies

Sterlite Technologies Limited. Sterlite Technologies Ltd is a global technology company. The Company is engaged in designing, building and managing smarter digital networks. Its digital networks focused business products, services and software includes optical communication products, network and system integration services and operations support systems (OSS)/business support system (BSS) software solutions. It operates in six continents and more than 100 countries. The Company operates through manufacturing facilities in India, China and Brazil. Its portfolio consists of approximately 155 patents. The Company's projects include intrusion-proof smarter data network for the Armed Forces, rural broadband for BharatNet, Smart Cities' development, and establishing high-speed Fibre-to-the-Home (FTTH) networks.

See profile

INE089C01029 National Stock Exchange of India India

Provider

IDFC Securities

IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.

See profile

Other Reports on these Companies

SmartInsider

Sterlite Technologies Ltd: 1 director

A director at Sterlite Technologies Ltd sold 25,000 shares at 143.315INR and the significance rating of the trade was 61/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly showing Close periods where trading activity is restricted under listing rules. The na...

Free Trial

January 4, 2024 January 4, 2024 1 EN

TheScreener

With a more favourable environment, STERLITE TECHNOLOGIES improves to Positive

STERLITE TECHNOLOGIES (IN), a company active in the Electrical Components & Equipment industry, is favoured by a more supportive environment. The independent financial analyst theScreener has confirmed the fundamental rating of the title, which shows 3 out of 4 stars, as well as its unchanged, defensive market behaviour. The title leverages a more favourable environment and raises its general evaluation to Positive. As of the analysis date December 24, 2021, the closing price was INR 281.75 and its potential was estimated at INR 339.60.

Free Trial

December 25, 2021 December 25, 2021 6 EN

IDFC Securities

Sterlite Technologies' Q2FY19 results (Outperformer) - Good execution continues; Order book traction solid

Q2FY19 result highlights Strong operating performance: Revenue of Rs10.8bn (IDFCe: Rs10.0bn) was up 24% qoq and +39.1% yoy driven by strong mix in products & services business. Revenues were 8% above our estimates due to strong growth in international market in Q2FY19. EBITDA margins improved by 335bp yoy to 25.2% (IDFCe: 24.9%) driven by strong operating performance. Reported EBITDA and net profit of Rs2.7bn and Rs1,354m were 11% & 1% respectively ahead than our estimates. Order book improves growth visibility: Q2 FY19 performance showed sustained growth, backed by a strong open order boo...

October 25, 2018 October 25, 2018 6 EN

GMR Infrastructure's Q3FY20 results (Outperformer) - Air traffic growth improved at the airports; deleveraging process gains momentum

Q3FY20 result highlights Airport traffic recovered in Q3FY20 with Delhi Airport witnessing a 7% yoy growth in passenger (vs 5% decline in H1FY20) and Hyderabad Airport reporting a 9% growth in passenger traffic (vs 4.9% in H1FY20). Note that traffic was subdued in H1 because of Jet Airways shutdown of operations. GMR Infrastructure (GMR) revenues grew by 11% yoy to Rs16.7bn aided by strong non aero revenues growth of 12% and 138% yoy growth in rental revenues. EBITDA for airport business was Rs6.7bn, +28% yoy Energy Business - Warora and Kamalanga PLF for Q3FY20 was 81% (vs 75% in Q3FY1...

February 24, 2020 February 24, 2020 12 EN

Bhoomika Nair

Bhoomika Nair

Ambuja Cement's Q4CY19 results (Outperformer) - In line; cost efficiencies at play

Q4CY19 result highlights Adj PAT +54% yoy to Rs4.55bn: was above estimates on lower tax (shifted to new tax regime) while operational performance was in-line. Volume increased 6.7% yoy: to 6.54mn tons led by pickup in demand in North and East, growing ahead of industry (mkt share gains). Realisations +2.7% yoy: to Rs4795/t due to sharp price hikes across regions in 1HCY19. This was further augmented by 14% yoy growth in premium products. Hence, revenue was up 9.5% yoy to Rs31.4bn. However, on a qoq basis realisations fell by Rs198/t (-4% qoq) as prices have corrected across regions from p...

February 24, 2020 February 24, 2020 6 EN

Nitin Agarwal

Nitin Agarwal

Event update: Aurobindo Pharma (Outperformer) - Unit IV receives EIR; positive outcome

Event Unit IV has received an Establishment Inspection Report (EIR) with Voluntary Action Initiated (VAI) status by USFDA Key highlights With the receipt of this status, FDA will now start granting new ANDA approvals from this facility. Notably, in mid-November, the USFDA had conducted a surprise inspection for nearly 10 days in Unit 4, post which it had issued 14 observations. While our read of the observations suggested that most of these were primarily procedural, market has been concerned around potential escalation of the issues into an OAI which, in turn, would have impacted revenu...

February 24, 2020 February 24, 2020 4 EN

Sign-up for free to access full reports immediately

Email Address*

Choose Password* ( 6 or more characters )

Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.

Select your country*

Get financial insights straight to your inbox

By clicking "register" you accept the Terms and Conditions & Privacy Policy

Already on ResearchPool?

Almost there...

Are you a professional investor?

Select your country

REGISTER

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

In order to access this report please create an account.

LOGIN

Sterlite Technologies' Q1FY19 results (Outperformer) - In line quarter; Strong growth in order book

Sterlite Technologies Ltd: 1 director

With a more favourable environment, STERLITE TECHNOLOGIES improves to Positive

Sterlite Technologies' Q2FY19 results (Outperformer) - Good execution continues; Order book traction solid

GMR Infrastructure's Q3FY20 results (Outperformer) - Air traffic growth improved at the airports; deleveraging process gains momentum

Ambuja Cement's Q4CY19 results (Outperformer) - In line; cost efficiencies at play

Event update: Aurobindo Pharma (Outperformer) - Unit IV receives EIR; positive outcome

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

Sign-up for free to access full reports immediately

ResearchPool Subscriptions

Get the most out of your insights

Why subscribe?

How to subscribe

ResearchPool Subscriptions

This report is only available to subscribers

Why subscribe?

How to subscribe