X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Sterlite: Does it offer value? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 10, 2000

    Sterlite: Does it offer value?

    Sterlite Industries, the non-ferrous and telecom cable major, has undergone a business restructuring process. Under the new structure the operations of the business have been demerged into two separate companies. Sterlite Industries Ltd. (SIL) and Sterlite Optical Technolgies Ltd (SOT).

    The demerger will be in the ratio of 1:1. The shareholder will receive 1 share in SOT for every share held in Sterlite Industries Ltd. The aggregate number of shares in the two companies will increase to 108.8 m. Each company will have 54.4 m shares. However, the aggregate share capital will remain the same as the company has halved the face value to Rs 5 from Rs 10.

    Businesses FY99 FY00
    Telecom Division Rs m % share Rs m % share
    Jelly Filled Cables 4,394.4 21.6% 4,006.9 13.7%
    Optic Fibre Cables 552.0 2.7% 1,078.7 3.7%
    Optic Fibre 493.6 2.4% 1,513.1 5.2%
    Division Revenue 5,440.0 26.7% 6,598.7 22.6%
    Copper Division
    Continuos Copper Rod 7,143.4 35.1% 9,099.8 31.1%
    Copper Cathods 5,944.3 29.2% 9,714.2 33.2%
    Sulphuric & Phospheric acid 577.7 2.8% 1,615.5 5.5%
    Division Revenue 13,665.4 67.2% 20,429.5 69.8%
    Aluminium Division
    Aluminium Foils 676.7 3.3% 883.2 3.0%
    Pow.Trans. Alu. Conductors 565.3 2.8% 1,338.6 4.6%
    Division Revenue 1,242.0 6.1% 2,221.8 7.6%
    Total Revenue 20,347.4 100.0% 29,250.0 100.0%

    We have assumed the non-ferrous and telecom business to contribute in the proportion of 70:30 to the bottomline. This gives the non-ferrous and telecom business a NPM of 7% and 11% respectively. Under this scenario, the non-ferrous business is valued at 4.4x FY00 earnings.

      FY00
      Non-Ferrous Telecom
    Contribution to Sales 77.4% 22.6%
    Contribution to PAT* 70% 30%
    PAT 1,693.6 725.8
    No. of Shares 54.4 54.4
    EPS 31.1 13.3
    CMP 138.0  
    P/E 4.4  
    * Estimates    

    Hindalco and Nalco, other players in the non-ferrous business, reported a NPM of 26.5% and 23.9% respectively in FY00. If we benchmark Sterlite's non-ferrous business against the industry standard the contribution at the PAT level will be much higher. Hindalco and Nalco are trading at 9.8x and 5.2x FY00 earnings.

    Sterlite's optical fibre business is growing at 100%. Further, it is part of the new economy. This should help it obtain new economy valuations. The stock is expected to be listed by the end of October.

     

     

    Equitymaster requests your view! Post a comment on "Sterlite: Does it offer value? ". Click here!

      
     

    More Views on News

    Bharti Airtel: A Good Quarterly Performance (Quarterly Results Update - Detailed)

    May 6, 2016

    Bharti Airtel has reported a8.4% YoY growth in the topline and an increase of 2.8% YoY in the bottomline for the quarter ended March 2016.

    Bharti Infratel: Ends the Year Positively (Quarterly Results Update - Detailed)

    Apr 27, 2016

    Bharti Infratel has reported a 7.3% YoY growth in the topline and an increase of 18.7% YoY in the bottomline for the quarter ended March 2016.

    Bharti Infratel: A Good Quarter (Quarterly Results Update - Detailed)

    Apr 8, 2016

    Bharti Infratel has reported a 4.9% YoY growth in the topline and an increase of 11.5% YoY in the bottomline for the quarter ended December 2015.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE TECK


    Aug 18, 2017 (Close)

    COMPARE COMPANY

    MARKET STATS