'Buy' maintained on Sterlite Ind. – TP revised to Rs.142 - Geojit BNP Paribas Financial Services Limited

'Buy' rating on Sterlite Industries is maintained with a reduced target price of Rs.142 as against the earlier target price of Rs.149.

3QFY12 performance of the company was in line with market expectations, but nothing to surprise positively.

FY12-14 EPS estimates reduced by 7 -15% to incorporate 3QFY12 performance, lower metal price assumption, higher USD/INR assumptions and higher power costs.

Maintain 'buy' rating considering inexpensive valuation of the stock and the target price is revised downward to Rs.142 from Rs.149.

Company's India copper smelting and Balco's EBITDA came in substantially above market estimates and this has offset weaknesses in Sterlite Energy (SEL) and international zinc business.

Copper business to remain strong while Balco and SEL to remain under pressure.

It seems that the stock is valued at a recession scenario as metal prices are expected to fall and project execution would be delayed further. These appear to be the downside risk.

Source : Equity Bulls

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