Sterlite Technologies - Q1 FY22 Result Report - YES Securities

(Rating: BUY, TP: Rs350, Upside: 16.7%)

- Revenue was down 11.2% sequentially to Rs 13,092 mn on account of 2nd covid wave disruption at its manufacturing plants. It recorded double digit revenue growth in optical interconnect business on QoQ basis in Q1FY22.

- Capacity utilization was 68% in optic fibre and around 70% in case optic fibre cable. Its market share has grown from 4.5% in Q1FY21 to 6.5% in Q1FY22 in optical fiber business; with total addressable market growing to $40 bn (5x over last 5 years).

- Focus on cost optimisation helped it to post marginally higher EBITDA margin at 17.7% vs 17.4% in Q4FY21.

- It is expected to benefit from the network creation cycle led by 5G and FTTX which has taken off. The growth in orderbook has started picking up with improving deal pipeline. Realization remains stable for the company due to its long term nature of contracts, through there has been some uptick in spot prices of optic fiber. Network integration business is expected to scale up as it expands globally; while it continues to invest in its Access solutions business. It trades at attractive valuation of 9.5x EV/EVITDA on FY23E EBITDA. We maintain BUY rating on the stock with target price of Rs 350.

Shares of STERLITE TECHNOLOGIES LTD. was last trading in BSE at Rs. 298.6 as compared to the previous close of Rs. 299.3. The total number of shares traded during the day was 51725 in over 1233 trades.

The stock hit an intraday high of Rs. 301.4 and intraday low of 297.95. The net turnover during the day was Rs. 15473409.

Source : Equity Bulls

Keywords