Sell

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...

Sterlite Tech's performance for Q2FY20 was muted on the EBITDA front while it was weak on the PBT front given the higher depreciation and interest charges from the new optical fibre (OF) capacity that has yet to witness volume offtake. Revenues came in at | 1,360 crore, up 25.4% YoY, led by services revenues (forming 50% of topline) while product revenues were down ~16% YoY on account of demand challenges and pricing pressure. EBITDA came in at | 288.5 crore aided by slightly higher revenues. Reported EBITDA margins came in at 21.2%, a decline of 400 bps YoY. We highlight...

Services & solution share in revenues to expand The company indicated that services and solution segment contribution increased to ~37% of topline in FY19 (vs. ~26% in FY18) given the superior execution in the Navy and other services projects. We also note that of the total order book of | 10,516 crore, services order book is ~| 5,000 crore, which, as per management, is likely to contribute to ~50% of the topline, in the next couple of years. Therefore, we raise our revenue forecast for FY20 and FY21E by ~9% & 16%, respectively, to build in superior execution in the...

GE T&D;'s Q3 order inflow was lower 30% YoY to Rs 7.8 bn and order backlog was down 12% YoY to Rs 72 bn. Company won major orders from Sterlite Power and Gujarat Transco during Q3.