KRChoksey is bullish on Sterlite Technologies has recommended buy rating on the stock with a target price of Rs 161 in its research report dated July 24, 2020.
KRChoksey's research report on Sterlite Technologies
For Q1FY21, Sterlite Technologies reported total revenue from operations of INR 8762 Mn, degrowth of 38.81% YoY and (down 24.47% QoQ). This was led by COVID-19 related lockdown which impacted overall performance. Revenue was above our estimate of INR 7720 Mn. EBITDA declined by 62.37% YoY and (-43.67% QoQ) in Q1FY21 to INR 1217 Mn. EBITDA margin fell 870 bps YoY to 13.89% in Q1FY21 from 22.58% in corresponding quarter last year. QoQ basis EBITDA margin declined 473bps from 18.62%. EBITDA margin was impacted due to lower operating leverage, adverse product mix and higher cost due to lockdown. Net profit after tax and minority for the quarter declined 95.78% YoY and (down 92.58% QoQ) to INR 59.60 Mn while net profit margin for the quarter was at 0.68%. Reported profit was higher than our estimate of INR 41 Mn. Order book remains robust at INR 103120 Mn. The order book consists of 38% from Telcos, 41% and 20% from Citizen Network and Enterprises respectively. Segment cloud is 1% of overall order book. EPS for the quarter stood at INR 0.15 (as against INR 3.51 in Q1FY20).
Outlook
We maintain an “BUY” rating on the stock and value the stock at 13x FY22E EPS of INR 12.41 with a target price of INR 161.
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