Buy Sterlite Technologies; target of Rs 376: Nalanda Securities
Nalanda Securities’ research report on Sterlite Technologies
Sterlite Technologies (SOTL) reported Q2 FY19 revenue at INR 1,084 crore, up 39% YoY and 24% Q-o-Q; EBITDA for the company stood at INR 273 crore, up 56% YoY and 13.5% Q-o-Q; PAT was reported at INR 138 crore, up 78% YoY and 7.8% Q-o-Q. Higher volumes and optimum utilization led to growth in EBITDA. The current open order book at around INR 9,455 crore, based on a good mix of international and domestic long-term contracts. This includes the Rs 3,500 crore multi-year system integration contract to design, build and manage the Indian Navy’s digital network.
At CMP of INR 323.2, the company is trading at 17.x FY20E EPS and 10.4x FY20 EV/EBITDA. We value the company using an average of P.E. and EV/EBITDA methodology giving an exit multiple of 20 and 12 respectively on FY 20 basis, achieving a target price of INR 376 which is an upside of 16%.
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