Sterlite (Q1 FY13)

India Infoline News Service | Mumbai |

Q1 FY13 revenue decreased marginally by 1.6% qoq, but was higher by 8% yoy and above our estimate of Rs101bn

CMP Rs101, Target Rs123, Upside 21.9% 
  • Q1 FY13 revenue decreased marginally by 1.6% qoq, but was higher by 8% yoy and above our estimate of Rs101bn

  • The outperformance in topline was largely due to a jump in contribution from copper

  • Copper production jumped to its two year high during the quarter. However, the impact was neutralized by lower Tc/Rc margins and a sharp decline in by-product revenues

  • BALCO’s aluminium business reported a decline in EBIDTA due to consumption of lower grade bauxite.

  • International zinc assets delivered inline numbers both on operational and financial front

  • VAL managed to reduce its aluminium production costs by 4.4% qoq to US$1,845/ton

  • Cost of production under SEL decreased from Rs2.3/unit in Q4 FY12 to Rs2.1/unit on account of higher availability of linkage coal.

  • Zinc to drive earnings over the next two years, maintain BUY with a revised 9-month price target of Rs123 

Result table
(Rs m) Q1 FY13 Q4 FY12 % qoq Q1 FY12 % yoy
Net sales 106,484 108,189 (1.6) 98,607 8.0
Raw material costs (50,398) (48,512) 3.9 (45,244) 11.4
Personnel costs (4,504) (4,152) 8.5 (3,850) 17.0
Other overheads (28,499) (28,471) 0.1 (21,930) 30.0
Operating profit 23,083 27,054 (14.7) 27,583 (16.3)
OPM (%) 21.7 25.0 (333) bps 28.0 (630) bps
Depreciation (5,182) (5,072) 2.2 (4,200) 23.4
Interest (2,419) (3,280) (26.2) (1,740) 39.0
Other income 9,484 7,035 34.8 8,416 12.7
PBT 24,966 25,737 (3.0) 30,059 (16.9)
Tax (3,339) (4,867) (31.4) (6,137) (45.6)
Effective tax rate (%) 13.4 18.9   20.4  
Other prov / minority etc (7,437) (7,097) 5 (7,481) (1)
Adjusted PAT 14,190 13,774 3.0 16,442 (13.7)
Adj. PAT margin (%) 13.3 12.7 59 bps 16.7 (335) bps
Extra ordinary items (2,174) (1,005) 116 (44) -
Reported PAT 12,016 12,769 (5.9) 16,397 (26.7)
Ann. EPS (Rs) 14.3 15.2 (5.9) 19.5 (26.7)
Source: Company, India Infoline Research

Topline outperformed due to higher contribution from copper

Q1 FY13 revenue declined 8% yoy to Rs106bn, higher than our estimate of Rs101bn. The outperformance in topline was largely due to higher than expected copper business revenue. Copper division revenue declined marginally by 1.8% qoq against a 5.7% decline in average LME copper prices. Power contribution too increased with the higher PLFs from the commissioning of 2 units of 600MW in previous quarter. The impact of higher copper division contribution on topline was reduced by a sharp decline in revenue from India zinc business.


Segmental performance
  Q1 FY13 Q4 FY12 % qoq Q1 FY13 Q4 FY12
Sales (Rs m)       Sales Contribution (%)
Copper 51,255 49,454 3.6 48.4 45.9
Aluminium 7,805 8,687 (10.2) 7.4 8.1
Zinc and lead - India 26,414 30,616 (13.7) 24.9 28.4
Zinc and lead - Global 10,117 10,095 0.2 9.6 9.4
Power 8,747 7,370 18.7 8.3 6.8
Total 105,914 107,628 (1.6)    
EBIT (Rs m)       EBIT contribution (%)
Copper 2,006 2,728 (26.5) 8.8 8.2
Aluminium 37 234 (84.2) 0.2 0.7
Zinc and lead - India 12,137 14,838 (18.2) 53.3 44.5
Zinc and lead - Global 1,878 2,215
 

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