2 STLTECH share price target reports by brokerages below. See what is analyst's view on STLTECH share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We believe, growth visibility remains intact and strong on account of 5G investments, IOT, FTTH roll out and domestic led initiatives like digital India and opportunities arising from global demand. STL is providing end to end solution and integrated offerings to its client (products are embedded with service which reduces the risk of pricing). We believe, China OF pricing to have limited impact on STL as business is moving more towards integrated offerings and higher value added products. STL is a global leader in end to end data network solutions design and deploy high capacity Fibre and wireless network. STL’s is working on its overall cost structure to improve EBITDA margin and return on capital employed from current level. The company has indicated that H2FY21 will be better than H2FY20. Furthermore, over the next 3 years, STL has guided to a) double the revenue to INR 100000 Mn b) reduce the net debt to equity by half to 0.5 and c) deliver a return on capital employed above 20%. Given the current demand scenario, we have slightly changed our estimates and revised our target price accordingly. We expect revenues/PAT to grow at a CAGR of 8%/7% over FY20-22E. AT CMP of INR 135 the stock is trading at PE of 11x FY22E EPS 12.41. 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.
We highlight that overall fibre demand is expected to witness some slowdown across geographies given the completion of 4G led capex andwith 5G capex pick up still some time away. Sterlite’s capacity expansionamid such muted demand will weigh on the bottomline. The shift of business mix towards services also runs the risk of working capital stress especially for govt. projects. Therefore, we downgrade the stock to REDUCE (vs. HOLD earlier), valuing it at 5x FY21E EV/EBITDA at Rs 120/share.
Notwithstanding Sterlite’s strong growth trajectory in the past couple of years driven by strong traction in global fibre demand, if pricing pressure continues that could be a key negative trigger. The shift of business mix towards services also runs the risk of working capital stress, especially for government projects. The recent announcement of promoters releasing pledged shares, however, is expected to provide some stability to stock prices. With ~19% stock price correction since our last update and removal of pledged shares overhang, we upgrade the stock to HOLD (vs. REDUCE, earlier), valuing it at 12x FY21E P/E at Rs180/share. Pricing recovery at industry levels remain a key upside risk to our stance.
Going forward, STL is significantly banking on the increasing demand for high-speed data across the globe. The strengthening of network with fiber is therefore critical. Additionally, projects like Governments BharatNet and smart city development are adding to the demand. With the increased capacity in place and integrated business model, STL is better placed than some of its peers. The increasing penetration in services and software segment has enhanced the industry size multifold. We assign a Buy on the stock with the target price of Rs.193 (10x FY21 EPS).
We believe Sterlite is well placed to capture growth in the optical fibre cable business and its expansion in services is further fueling growth. Order book at INR98.5bn signals healthy revenue visibility for ensuing quarters. The stock is trading at 9.7x FY21E EPS. We maintain ‘BUY’ with revised TP of INR296 (18x Q3FY21E EPS).
Sterlite has demonstrated a strong growth trajectory in the past couple of years driven by strong traction in global fibre demand. The recent China Mobile pricing fiasco, however, has clouded overall sentiments. Moreover, huge capacity addition across the globe is also likely to cap the price recovery in near to medium term. The shift of business mix towards services also runs the risk of working capital stress & thin margin. Therefore, we downgrade the stock to REDUCE, valuing it at 12x FY21E (vs. 15x earlier) EPS to arrive at target price of Rs 180/share. Our earnings multiple cut is reflective of lower growth outlook, changing business mix and overhang of pledged shares.
We believe that Sterlite is well placed to capture growth in the optical fibre cable business, and its expansion in services is further fueling growth. The stock is trading at 12.8x FY21E EPS. Maintain ‘BUY’ with a revised TP of INR285 (18x Q1FY21E EPS).
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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