Sterlite Industries Ltd (Q4 FY13)

Revenue during the quarter increased 18% qoq to Rs126.7bn, higher than our estimate of Rs117bn.

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs95, Target Rs101, Upside 6%

  • Topline jumps 18% qoq to Rs126.7bn on the back of higher contribution from domestic zinc and power business

  • Copper business performance improved on account of higher Tc/Rc margins

  • HZL outperformed on the back of strong volume growth in mined metal output and lower costs

  • Product premiums under BALCO surged on a qoq basis; turning the company profitable

  • VAL’s alumina refinery remained shut’ Aluminium CoP reduced sharply on a qoq basis

  • Power production under SEL recovered qoq on easing evacuation issues; SEL commissioned its fourth 600MW unit in March ‘13

  • Lacking triggers in the near term; Maintain Market Performer with a revised 9-month price target of Rs100.6

Result table
(Rs m) Q4 FY13  Q3 FY13 % qoq Q4 FY12 % yoy
Net sales 126,738 107,375 18.0 108,189 17.1
Raw material costs (57,724) (50,226) 14.9 (48,512) 19.0
Personnel costs (5,035) (4,747) 6.1 (4,152) 21.3
Other overheads (30,912) (29,133) 6.1 (28,471) 8.6
Operating profit 33,067 23,269 42.1 27,054 22.2
OPM (%) 26.1 21.7 442 bps 25.0 108 bps
Depreciation (4,534) (5,382) (15.8) (5,072) (10.6)
Interest (2,758) (2,269) 21.6 (3,280) (15.9)
Other income 7,984 8,590 (7.1) 7,035 13.5
PBT 33,759 24,208 39.5 25,737 31.2
Tax (4,180) (3,555) 17.6 (4,867) (14.1)
Effective tax rate (%) 12.4 14.7   18.9  
Other provisions / minority etc (9,936) (8,114) 22 (7,097) 40
Adjusted PAT 19,643 12,539 56.7 13,774 42.6
Adj. PAT margin (%) 15.5 11.7 382 bps 12.7 277 bps
Extra ordinary items (397) (625) (37) (1,005) (61)
Reported PAT 19,246 11,914 61.5 12,769 50.7
Ann. EPS (Rs) 22.9 14.2 61.5 15.2 50.7
Source: Company, India Infoline Research

Topline jumps 18% qoq led by higher contribution from domestic zinc and power sales

Revenue during the quarter increased 18% qoq to Rs126.7bn, higher than our estimate of Rs117bn. The outperformance was largely due to a jump in mined metal output under HZL and higher power sales volume under Sterlite Energy Ltd (SEL). Power production which was impacted by the evacuation restrictions imposed by the grid authorities improved on a qoq basis. All the business segments reported higher than expected revenue during the quarter. BALCO’s outperformance was led by higher product premiums and that of copper was due to higher than expected copper production.

BALCO: BALCO managed to report stronger numbers during the quarter on the back of higher product premiums. Aluminium production remained flat on a qoq basis at 62,000 tons. However, product premiums increased sharply on a qoq basis, which was a surprise for us. The management indicated that this was due to strong demand of value added products. Aluminium CoP declined 3.3% qoq due to lower power costs and production efficiencies. This led to the company reporting a profit of Rs200mn against a loss of Rs80mn in Q3 FY13. The management expects to start mining at its coal mine by Q2 FY14. The process of diversion of forest land has been initiated by the State Government and the company is in the process of signing the mining lease. The initial trials at the 325,000tpa smelter are on and the company expects to tap the first metal in Q2 FY14. In the initial phase the new smelter would consume power from the existing power plants as the 1200MW power plant is still awaiting its final stage clearance.

BALCO’s quarterly performance
(Rs m) Q4 FY13 Q3 FY13 % qoq Q4 FY12 % yoy
Aluminium production (Tons) 62,000 62,000 - 62,000 -
Revenue (Rs mn) 9,540 8,320 14.7 8,000 19.3
EBIDTA (Rs mn) 850 640 32.8 950 (10.5)
PAT (Rs mn) 200 (80) (350.0) 460 (56.5)
Avg LME Aluminium prices (US$/ton) 2,037 2,019 0.9 2,214 (8.0)
Aluminium CoP (US$/ton) 1,930 1,995 (3.3) 1,918 0.6
Source: Company, India Infoline Research

Vedanta Alumina (VAL): Revenue remained flat qoq to Rs17.1bn on account of a decline in alumina production and marginally lower aluminium production. VAL’s alumina refinery remained closed for the quarter against a production of 104,000 tons in the previous quarter. The company had taken a temporary shutdown of its refinery due to unavailability of bauxite. The company is trying to source bauxite from Orissa and other states to restart its operations. Aluminium metal production declined marginally to 133,000 tons. Aluminium CoP in declined on a qoq basis due to higher availability of linkage coal and lower raw material costs. The impact of operational efficiency and lower coal costs was marginally offset by increase in alumina purchase cost. In dollar terms it decreased to US$1,799/ton from US$1,928/ton in Q3 FY13.

VAL’s quarterly performance
(Rs m) Q4 FY13 Q3 FY13 % qoq Q4 FY12 % yoy
Aluminium production (Tons) 133,000 135,000 (1.5) 115,000 15.7
Revenue (Rs mn) 17,090 17,130 (0.2) 16,630 2.8

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