**Sterlite Q3FY20 (Cons – Un Audited)**
Total Revenue from ops at 1,203 Cr
1,335 Cr (-9.88%) YoY |1,360 Cr (-11.56%) QoQ
9 months ending 3,994 Cr vs. 3,296 Cr (21.14%)
Net Profit of 49.99 Cr
147.6 Cr (-66.61%) YoY 167.7 Cr (-70.62%) QoQ
9 months ending 351 Crs vs 415 Cr (-15.44%)
EPS (in Rs) 1.29
3.59 YoY | 3.92 QoQ
9 months ending EPS: 8.68 vs. 9.79
View: Result is not good and below expectation. YoY and QoQ revenue declined due to optical fiber business down and profit significantly down due to INR 50 Cr provided for old disputed excise matter.
**Business Updates & Highlights**
EBITDA: Rs. 247 crore in Q3FY20 Vs. 304 Cr in Q3FY19 Vs. 298 Cr in Q2FY20 therefore declined by 18.7% in YoY and 17% in QoQ. (Negative Impact) due to volume decline in OF and Realization declined in OF.
The company continues to grow its healthy order book of Rs. 8,535 crore with a strong growth outlook.
63% order books related to project and 37% related to O&M.
The Group on January 9, 2020 acquired 12.5% stake in ASOCS, a developer of open, disruptive and virtualized Radio Access Network (vRAN) solutions, delivering 4G and 5G for cellular networks. ASOCS is a pioneer in virtual Radio Access Networks (vRAN) and a provider of fully virtualized Base Station solutions for Enterprise and Talco-Networks. STL Group and ASOCS will partner in creating cutting edge solutions that will address the rollout of 5G networks.
**Status of current project**
STL awarded T-Fiber project to deliver digital infrastructure to 6 millions rural citizens of Telangana around INR 1100 Cr.
Project NFS completed (Indian Army Project in J&K) and moving into O&M.
Project Varun (Indian Navy Project) 65% completed.
Fiber rollout – Telcos 5500 Kms completed YTD.
ROE and ROCE is around 36% and 31% respectively and book value per share is around INR 41 and share is trading around 3.1x of its book value. Company is currently trading at annualized PE of around 14 which is high as per Industry benchmark. Promoter holding in the company is around 53.6% which is stable, FIIs and mutual fund hold around 4.94% and 4.6% respectively.
** Share view**: Share price high 301 (52 week) and now 130 almost 57% corrected from their peak due to continuously performance was not upto mark on previous few quarters. Sterlite Tech is a global leader in end to end data network solutions design and deploy high-capacity fiber and wireless networks.
Company can benefitted due to Government push towards Broadband connectivity to all villages by 2022, Investment of INR 7 lakhs Crs in next 4 years from both govt and Industry. Roll out of 5G network and expansion will require significantly more fibre then 4G, fiberization of towers from 30% to 70% and deployment of additional optical fiber cable of 3Mn Km route Km. Global OFC Demand came down in 2019 but likely to pick up on back of 5G deployment.
Short term outlook is bearish and share can further correct as result is continuously declined on previous few quarter. Share support price is INR 108.
Long term investor should take cautious approach to continue with the company.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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