Sterlite Technologies' (STL) strong operating performance, prudent working capital management, strong operating cash flow generation, improving asset turns & return profile and aggressive growth plans support our continued positive stance on the company. During FY09 STL generated very strong operating cash flows of Rs4,755mn led by prudent working capital management (net working capital reduced from 127 days in FY08 to 55 days in FY09) and moderate EBIDTA growth of 13%. The strong cash generation has not only part funded the capex (Rs1.3bn in FY09) but also led to reduction in net debt from Rs5.7bn to Rs3.5bn i.e. Net Debt/Equity of 0.6x in FY09 v/s 1.1x in FY08. While the net profits for FY09 were hit by forex loss of Rs348mn due to rupee depreciation on forex debt, STL has significantly reduced the forex exposure which reduces risk of forex loss uncertainty going forward. The ROE for FY09 at 14.2% v/s 18.7% was impacted by the same forex loss; however ROCE improvement from 13.7% to 16.6% in FY09 was led by improved asset turnover (2x v/s 1.4x in FY08) and reduction in capital employed due to working capital reduction.
Overall, the growth in Telecom and Power sectors continue to remain strong both in India and internationally, aggressive expansion plans of STL continues to help garner market share across business verticals. We continue to remain bullish on the stock given its healthy balance sheet, strong PAT and EPS CAGR of 46% and 37% respectively over FY09-12E, improving return profile (ROE improving to ~20% from FY10E onwards) and attractive valuations of 7.5x and 6.5x our est. EPS of Rs24.5 and Rs28.3 for FY10E and FY11E respectively. Reiterate BUY.
--~--~---------~--~----~------------~-------~--~----~
Safe Harbor:
The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
You received this message because you are subscribed to the Google Groups "Investors Please Listen !" group.
To post to this group, send email to investorspleaselisten@googlegroups.com
To unsubscribe from this group, send email to
investorspleaselisten+unsubscribe@googlegroups.com For more options, visit this group at http://groups.google.com/group/investorspleaselisten?hl=en
-~----------~----~----~----~------~----~------~--~---
No comments:
Post a Comment