Upgrades

Telecom products & defence to propel growth

...

STL announced a fresh capex of | 200 crore to set up 9 mn Fkm optical fibre cable plant in the US and UK. Consequently, its overall optical fibre cable capacity is expected to expand from 33 mn Fkm to 42 mn Fkm. STL indicated that capacity enhancements will support extensive fibre build-outs planned across the US, Europe and UK to boost rural broadband and 5G roll outs. On the financial front, it aims to reach | 10000 crore revenue run rate by Q4FY23 (vs. | 10000 crore revenue target in FY23 earlier, given Covid led delays in services portfolio) along with net debt/equity < 0.5 and RoCE > 20%. The...

STL has indicated that OFC capacity utilisations are at 100%. It also said that optical fibre demand has revived by investments in digital infrastructure. Globally, OFC industry volumes in 2021 are likely to grow ~6% YoY. STL perceives that unprecedented decade of digital network creation is on the anvil. The company has also maintained that, going ahead, growth should be driven by growing OFC volumes, optical interconnect business, scaling up SI business (both domestically and going global) and building access solution business. We bake in revenues CAGR of ~26.6% in FY21-23E. We...

STL has indicated that capacity utilisations are at all-time high and execution on the ground for services also continues to improve on Q-o-Q basis. It has guided for continued growth in Q4FY21 on QoQ basis. It has indicated that Optical fiber demand has revived by investments in digital infrastructure. Globally, OFC Industry volumes in H22020 have grown by 5% YoY and STL volumes have grown faster than the industry high. STL perceives that unprecedented decade of digital network creation. Factors such as adoption of open source standard and software defined networking, are some of the...

We highlight that while long term target is attractive, the fibre pricing weakness persists. Moreover, we would await meaningful traction in demand before turning constructive. Post ~40% run up since our last update, we downgrade our rating to REDUCE (vs. HOLD, earlier). We value...

STL indicated that global OFC demand came down in 2019 as China and India witnessed 13% and 29% de-growth, respectively, while North America & Europe were up 4% YoY. The company expects a demand and pricing recovery from H2FY21E onwards and has guided for an improvement in performance sequentially driven by strong services revenues and foray into new geographies. We lower our revenue forecast for FY20 to ~9% and expect FY21 revenues to witness a spurt (up 18% YoY) with new market foray that will improve capacity utilisation as well as continued network...

Sterlite Tech reported an in-line topline performance (~63% YoY growth) in Q1FY20 driven by strong domestic revenues (~64% of pie), which witnessed a staggering ~87% YoY growth. Exports revenues, on the other hand, forming 36% of revenues, grew 33% YoY. Reported EBITDA margins came in higher at 22.6% (vs. our estimate of 19.5%) given the higher proportion of product revenues that command superior margins. PAT came in lower at | 141.4 crore (vs. our expectation of | 151.2 crore) despite higher EBITDA, on account of higher depreciation and interest costs owing to...

ICICI Securities Ltd | Retail Equity Research Sterlite Technologies (Sterlite) has announced the signing of definitive agreements for acquisition of a European specialised optical fibre cable manufacturer Metallurgica Bresciana S.p.A (Metallurgica) in all cash deal for the total consideration of Euro 47 mn (| 367 crore), to be funded by...

SOTL was announced lowest bidder a year ago. But was negotiating with the government for better terms. Government had to increase its budget allocation for this contract. We are bullish on SOTL's optic fiber business (75% of revenue). The capacity expansion...

EBITDA came in at | 209.5 crore (I-direct estimate: | 187.7 crore), with EBITDA margin of 24.1%, ahead of our estimate of 21.8%. The EBITDA beat was largely led by superior product segment growth,...

Revenues came in at | 779.3 crore, up 41.5% YoY (a tad lower than our estimate of | 809 crore. While the company has discontinued providing OF/OFC sold volume data/ and product/services break-up in the quarter, we believe the topline beat is owing to superior exports...

Revenues came in at | 744.4 crore, up 23.4% YoY and higher than our estimates of | 701.5 crore. While the company has discontinued providing the OF/OFC sold volume data/and product/services breakup in the quarter, we believe the topline beat is owing to superior exports (product) revenues that grew 76.8% YoY to | 320 crore EBITDA was at | 157.1 crore, up 37.5% YoY, in line with our estimate of | 157.8 crore. Margins, however, were lower than expected at 21.1% vs. expected 22.5% due to higher employee expense PAT at | 60.6 crore (vs. estimated | 60 crore) wad aided by superior...

Revenues came in at | 707.2 crore, up 15.2% YoY and higher than our estimate of | 693.5 crore. The company has discontinued sharing OF/OFC sales volume data but the superior margin profile in the quarter hints at good ramp up from the products segment EBITDA came in at | 162.4 crore, up 23.0% YoY and above our...

Sterlite Technologies (STLs) 1QFY16 results were below estimates due to sluggish optic fiber cable (OFC) sales. This seems to be a one-off, which management is attributing to seasonal weakness in government orders.

Sterlite Technologies (STLs) 4QFY15 results were in-line with estimates as the company?s telecom business continues to be driven by product-mix improvements. The key highlight was a corporate restructuring which demerges STL?s telecom and power businesses into two separate entities.