Scripscan:Sterlite Industries (India) Ltd
cmp:109
Code:500900
Story:Sterlite Industries’ (Sterlite) consolidated net sales for 2QFY2012 grew by 68.1% yoy. However, subdued performance from the aluminium and energy segments dragged the company’s profitability. Adjusted PAT grew by 0.9% yoy to Rs 1,022cr. For 2QFY2012, Sterlite’s net sales increased by 68.1% yoy to Rs 10,134cr, slightly above our estimate of Rs 9,726cr. Net sales growth was driven by higher zinc sales volumes as well as higher realization of zinc, lead and copper. Revenue of the copper, zinc and power segments grew by 76.5%, 66.3% and 282.3% yoy, respectively.EBIT of the copper and zinc segments grew by 95.8% and 64.5% yoy, respectively. However, EBIT of the aluminium and power segments declined by 93.9% and 6.9% yoy, respectively. Aluminium cost of production at Balco increased by 22.0% yoy to US$2,133/tonne on account of increased prices of alumina and carbon. Sterlite’s associate, Vedanta Aluminium (VAL) reported loss of Rs 624cr in 2QFY2012 compared to loss of Rs 196cr in 2QFY2011. Thus, adjusted net profit increased by 0.9% yoy to Rs 1,022cr, significantly below estimate of Rs 1,641cr. Sterlite is currently trading at 3.1x and 2.3x FY2012E and FY2013E EV/EBITDA,respectively.I expect Sterlite to benefit from the expansion of zinc-lead smelting capacity during FY2012-13. Furthermore, Sterlite’s expansion in the silver-rich Sidearm Khurd mine should result in robust bottom-line growth.Buy it with a price target of 128rs to be achieved in the next 9 months.
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