KR Choksey recommended accumulate rating on Sterlite Technologies with a target price of Rs 423 in its research report dated April 27, 2018.
KR Choksey's research report on Sterlite Technologies
Sterlite Tech reported good set of numbers in Q4 FY18 driven by increase in revenue mix (tilted towards products), launching new products and growing international presence. Sterlite Tech reported revenues of INR 8,466 Mn, up by 19.7% yoy with a reported gross margin of 59.6% (+105.6 bps yoy). The increase in margins was primarily driven by the improvement in utilization of OFC to ~90% in FY18 Vs 60% in FY17. In Q4 FY18, the company reported operating margin of 19.8%, up 314.6 bps yoy. The margin has improved on the back of strong execution on the operations front coupled with controlled employee expenditure and improved operational levers. Order book remains robust at INR 52,230 Mn, up 14.2% qoq and 73% yoy. The order book consists of INR 11,280 Mn worth of orders for Services and Software, whereas INR 40,950 Mn for Products.
Outlook
SOTL is currently trading at a P/E multiple of 31.9x/25.1x in FY19E/FY20E. We assign a P/E multiple of 31 to the FY20 estimated EPS of INR 13.7 to come up at a target price of INR 423, an upside of 23.4% over the CMP. We assign a “BUY” rating to the stock.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.