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Sterlite Ind: Continues to shine - Views on News from Equitymaster
 
 
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  • Jan 12, 2001

    Sterlite Ind: Continues to shine

    Sterlite Industries, an old economy player, has come in with another sterling performance in 2QFY01. With bouyant growth rates the company is giving the TMT sector a run for its money.

    The growth in turnover has been driven by both improved realisations and volumes. Realisations have been on an uptrend with copper prices firming up on the London Metal Exchange (LME). With phase - I of the debottlenecking complete the capacity has been augmented to 120,000 TPA. The increase in capacity and higher utilisation rates has enabled the company to register a 70% growth in sales volume. Phase - II of debottlenecking, which will augment capacity to 150,000 TPA, is expected to be complete by FY01.

    (Rs m) 2QFY00 2QFY01 Change
    Net Sales 4,628 7,357 59.0%
    Other Income 54 109 99.8%
    Expenditure 3,946 6,533 65.6%
    Operating Profit (EBDIT) 682 824 20.8%
    Operating Profit Margin (%) 14.7% 11.2%  
    Interest 309 295 -4.5%
    Depreciation 188 220 17.4%
    Profit before Tax 240 417 73.7%
    Tax - 41  
    Profit after Tax/(Loss) 240 376 56.7%
    Net profit margin (%) 5.2% 5.1%  
    No. of Shares (eoy) (m) 44.5 55.9  
    Diluted earnings per share* 17.2 26.9  
    P / E ratio   6.1  
    *annualised      

    With copper prices firming up the treatment and refining charges (TC/RC) have also been on the rise. Despite the increase in TC/RC charges the OPM of the company has fallen by 350 basis points indicating that operating expenses have increased.

    The company has decided to spin off its aluminium conductor business into a 100% subsidiary company. The long awaited power reforms could boost the demand for aluminium conductors, anticipating strong growth, the company believes it will be better positioned to pursue such opportunities independently.

    At Rs 165 the company is trading at 6.1x 2QFY01 annualised earnings.

     

     

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