Mehabe score: 3 G Factor: 3 Piotski Score: 5 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 5.
Description
Sterlite Technologies Limited was established in July 2001 after the demerger of the telecom division of Sterlite Industries Ltd (SIL). In July 2006, STL acquired the transmission line business of SIL to foray into the power transmission cables business. STL has grown over the years to become the largest Optical Fiber and Optical Fiber Cables manufacturer in the country. The company also has sizeable presence in the overseas markets with an established presence in the global optical fiber market.
Main Points
Order Book
Presently, the order book of the company stands at ~10700 crores worth of orders out of which about ~5,500 crores worth will be delivered in FY22. Telcos fill the majority of order book at 48%, followed by Citizen networks (34%) & Enterprises (18%). #Site:STLTECHMain Symbol:STLTECH
Stock trades at 298.0, above its 50dma 276.24. It also trades above its 200dma 221.98. The stock remains bullish on techicals
The 52 week high is at 318.00 and the 52week low is at 115.45
Price Chart
P/E Chart
Sales and Margin
Strengths
– has a good return on equity (ROE) track record: 3 Years ROE 24.34%
– has been maintaining a healthy dividend payout of 28.81%
Weakness
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Competition
– The industry trades at a mean P/E of 24.8x. Birla Cable trades at the industry’s max P/E of 37.66x. STLTECH trades at a P/E of 30.7x
– Industry’s mean G-Factor is 2.8 while the mean Piotski score is 6.0. STLTECH has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 23.4%. The max 1- month return was given by T N Telecom.: a return of 152.2 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 1309.0 cr compared to Rs 876.0 cr for period ended Jun 2020, a rise of 49.4%
Operating Profits reported at Rs 232.0 cr for period ended Jun 2021 vis-vis 121.0 for period ended Jun 2020 .
Operating Margins expanded 391.1 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 2.92 compared to Rs 3.14 for previous quarter ended Mar 2021 and Rs 0.15 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 5258.0 cr for period ended TTM vis-vis sales of Rs 4825.0 cr for the period ended Mar 2021, a growth of 8.2%. The 3 year sales cagr stood at 1.1%.
Net Profit reported at Rs 385.0 cr for period ended TTM vis-vis sales of Rs 275.0 cr for the period ended Mar 2021, rising 28.6%.
Company reported a poor Net Profit CAGR of -11.9% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 14.0% compared to 24.0% over the last 3 Years. – The stock has given a return of 146% on a 1 Year basis vis-vis a return of -4% over the last 3 Years. – The compounded sales growth on a TTM bassis is 14% vis-vis a compounded sales growth of 15% over the last 3 Years. – The compounded profit growth on a TTM basis is 29% vis-vis a compounded profit growth of -6% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 6.04% vis-vis 5.11% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 29.87% vis-vis 31.8% for Mar 2021
Conclusion
– has a good return on equity (ROE) track record: 3 Years ROE 24.34%
– has been maintaining a healthy dividend payout of 28.81% –
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 276.24 and is trading at 298.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
