STL Q4FY12 net revenue surprised us as volume increased in power conductor segment however EBITDA and net profit were in line with our estimates. Net revenues grew by 18.6% YoY to Rs 809.3cr crore driven by mix of volume growth and net realization in both power conductor and telecom segment. EBITDA stood at Rs 66.7cr, robust growth of 36.3% YoY. Operating margins marginally improved by 100bps on account of 50bps margin improvement in power segment. However margins for telecom segment declined 260bps. Net profit increased by ~59% YoY on the back of improved operating margins. The company incurred Rs 3cr higher interest in the quarter due to increase in debt in the quarter. Order book stood at Rs 2300cr the end of Q4FY12. Management expects orderbook to gain momentum as PGCIL and major clients release new orders in FY13E."
"Revenues increased by 12.75 QoQ to Rs 536.3cr lead by higher sales volume. Power conductor segment reported volume growth of 7.4% QoQ to 35000MT in Q4FY12. However EBITDA /ton declined 5% QoQ from Rs 7890 to Rs 7450. EBITDA margins stood at 4.9% during the quarter. The management has guided improvement in EBITDA/ton of Rs 9000 to Rs 10000 for FY13E. Telecom segment reported robust growth of 39% QoQ to Rs 261.2crs. EBITDA margins improved by 90 bps on QoQ to 16.8%. Improvement in EBITDA margin indicates plant stabilization issues are over and the management has guided healthy operating margins for FY13. On the standalone basis interest expense has increased by 26% on sequential basis due to higher borrowing in Q4FY12. Going ahead the company plans capex of Rs 310crs for transmission project and Rs 150crs for its core business. We believe it would again stretch the balancesheet. We believe increase in debt raised for funding of expansion plans would be a spoilsport going ahead."
"STL reported sales growth of 20% YoY in FY12 however margins squeezed due to low margin order execution led by intense competition. We believe volume growth in both power and telecom segments are back on track as new plants are stabilizing. Strong growth in net sales will be driven by increase in volume as well as higher realization. However increase in interest expense will dent the net profit. Currently the stock is trading at 8.9x PE to its FY13E earnings. We maintain our BUY recommendation on the stock with a target price of Rs 47, valuing at 11x PER FY13E," says KRChoksey research report
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