Dear All,
Forwarding you the Result Flash on Sterlite Industries for 4QFY2011 with a Buy recommendation and a Target Price of Rs215 (12 months).
Sterlite reported stellar profitability for 4QFY2011 beating our expectations. The company reported a robust sales growth of 39.9% yoy to Rs10,000cr in 4QFY2011, above our estimates of Rs9,896cr. Net profit grew 35.1% yoy to Rs1,925cr, above our estimate of Rs1,473cr on account of higher-than-expected profit from on Zinc business. We will review our estimates for FY2012 and FY2013 post conference call today. Meanwhile, we maintain our Buy rating on the stock with a target price of Rs215.
4QFY2011 consolidated financial result highlights-
· Net sales increased 39.9% yoy to Rs10,000cr above our expectation of Rs9,896cr. Net sales growth was primarily driven by increase in zinc and lead sales volumes. Zinc production volumes increased 29.0% yoy to 194,000 tonnes, while lead production volumes declined 10.0% yoy to 18,000 tonnes in 4QFY2011.
· EBITDA increased 22.9% yoy to Rs3,059cr, while EBITDA margin expanded 543bp yoy to 30.6%.
· Other income increased 30.9% yoy to Rs725cr, while tax rate declined 190bps yoy to 17.2% in 4QFY2011. Consequently, net profit increased 35.1% yoy to Rs1,925cr, significantly above our estimate of Rs1,368cr.
Exhibit 1: 4QFY2011- Actual vs. Estimates
| (Rs cr) | 4QFY11A | 4QFY11E | Variation (%) |
| Net Sales | 10,000 | 9,896 | 1.1 |
| EBITDA | 3,059 | 2,489 | 22.9 |
| EBITDA margins (%) | 30.6 | 25.2 | 543bp |
| PBT | 3,296 | 2,911 | 13.2 |
| Adj. net income | 1,925 | 1,473 | 30.7 |
Source: Company, Angel Research
Exhibit 2: 4QFY2011 Performance summary
| Y/E March (Rs cr) | 4QFY11 | 4QFY10 | % chg | FY2011 | FY2010 | % chg |
| Net Sales | 10,000 | 7,147 | 39.9 | 30,248 | 24,501 | 23.5 |
| - Consumption of Raw Material | 4,531 | 3,467 | 30.7 | 14,389 | 12,139 | 18.5 |
| (% of Net Sales) | 45.3 | 48.5 | 47.6 | 49.5 | | |
| - Power& Fuel | 685 | 493 | 39.0 | 2,380 | 1,953 | 21.8 |
| (% of Net Sales) | 6.8 | 6.9 | 7.9 | 8.0 | | |
| - Staff Costs | 368 | 235 | 56.2 | 1,132 | 854 | 32.5 |
| (% of Net Sales) | 3.7 | 3.3 | 3.7 | 3.5 | | |
| - Other expenses | 1,414 | 913 | 55.0 | 4,478 | 3,261 | 37.3 |
| (% of Net Sales) | 14.1 | 12.8 | 14.8 | 13.3 | | |
| Total Expenditure | 6,998 | 5,108 | 37.0 | 22,379 | 18,207 | 22.9 |
| (% of Net Sales) | 70.0 | 71.5 | 74.0 | 74.3 | | |
| Operating Income |
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