Sterlite Technologies has announced that it has received Rs3.72bn order from BSNL for deploying fiber to the home (FTTH) network.
This is a pilot deployment from BSNL which also plans to deploy similar FTTH network in ~25 cities in India which would be an opportunity of 4x the size of current order.
The network integration order received is likely to be executed in the current financial year FY10. In our estimates we have factored revenues of Rs2bn from NI business for FY10 where as the current order itself would contribute Rs3.7bn to the segment revenues. With this order our FY10E EPS estimates are likely to be increased by 3-5%.
At CMP of Rs162, stock trades at 6.6x and 5.7x our estimated EPS of Rs24.5 and Rs28.3 for FY10E and FY11E respectively. We reiterate BUY rating with target price of Rs230.
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