**Sterlite – Q4 FY20 (Audited –Cons)**
CMP: 96
Total income from operations at 1,160 Cr
1,791 Cr (-35.21%) YoY | 1,203 Cr (-3.57%) QoQ
Year ending revenue: 5,154 Cr Vs. 5,087 Cr (1.31%)
Net Profit of 73.8 Cr
163.1 Cr (-55.29%) YoY 49.9 Cr (47.82%) QoQ
Year ending Net profit: 424.4 Cr Vs. 577.7 Cr (-26.53%)
EPS (in Rs.) 1.97
4.06 YoY | 1.29 QoQ
Year ending EPS: 10.64 Vs. 13.83
View: Result is overall good. YoY revenue and profit both have declined. QoQ revenue declined but bottom line improved. Year ending performance is overall good.
**Business Updates & Highlights**:
EBITDA in Q4FY20 is INR 226 Cr Vs 328 Cr in Q4FY19 and EBITDA for financial year ending is around INR 1,104 Cr Vs. 1160 Cr in FY19 therefore declined by 5%.
Order Book of over Rs. 10,000 crore with diversified global wins.
. On March 24, 2020, the Board of Directors have approved the proposed buyback of Equity Shares for a total amount not exceeding Rs. 145 Crore, being 9.95% and 9.32% of the aggregate of the total paid-up equity capital and free reserves. Maximum buyback price: Rs. 150 per share
**Major development during the FY 20** Multi year contract for optical fibre in Africa. Entry in to one of the top 4 global cloud companies. Awarded T-fibre project in Telangana. Partnered Telekom Albania for digital transformation. Top 20 customers accounting for more than 70% of revenues
Recommendation of final dividend of 175% (Rs. 3.50/‐ per Equity Share of Rs. 2/‐ each of the Companyfor approval by the shareholders of the Company
**Financial**
ROE and ROCE is around INR 38% and 22% respectively and book value per share is around INR 47 and share is currently trading at 2.3x of its book value. Company is currently trading at annualized PE of around 9.2 which is average as per industry benchmark. Promoter holding is around 53.3% in the company which is good. FIIs and mutual fund hold around 4.2% and 4.9% in the company. Free cash flow as of March 20 is INR 100 Cr. Net worth as of March 20 is INR 2,023 Cr Vs. 1,815 Cr in March 19.
**Share View**: Share price high 198 (52 week) and now 98 almost 51% corrected from their 52 week due to quarterly performance continue declined. STRTECH is a digital technology company with offices in India, China, US, SEA, Europe and MEA is primarily engaged in the business of Connectivity and Network solutions.
Position: Short term support price is 80. Long term investor should continue with the company.
Opportunities: Share is heavily corrected and currently at beaten down value for long term investor. The fibre demand is currently in temporary pause at the end of 4G and at the start of 5G network deployment. After the pause in 2019 & 2020, the fibre demand will start to grow from 2021, much faster than currently anticipated. Company has been able to achieve multiple dimension during the year 2020 eg. Robust order book which is around 10K Crs, Strategic Transformation to Solutions driven Account Based Organization with four end-to-end solutions – optical connectivity, fibre deployment, FTTx Mantra for Access Networks and Network Modernization. Established Ecosystem for Make in India Next-Gen Solutions by assembling a strong ecosystem of partners in hardware manufacturing, cloud computing and academia.
Invested in Technology and grew Patents Portfolio to 358 patents, for optical connectivity, network services, and virtualized access solutions.
Risk: Share price corrected heavily on the previous bad quarters and still position and also the global environment witnessed uncertainty and sluggish growth. Between 4G and 5G roll out still not certainty in current business environment.
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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