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ICICI Direct Report
Sterlite Technologies Ltd.'s performance in Q1 FY21 was weak on the operating front as expected, which is reflective of demand slowdown/pricing pressure in product segment and Covid-19 impact. Revenues came in at Rs 876 crore, down approximately 39% YoY as projects execution was significantly impacted due to lockdown, while production and delivery was hurt due to logistic challenges. Ebitda was at Rs 122 crore, down approximately 62% YoY, with margins at 13.9%, down 870 basis points YoY, impacted by negative operating leverage on account of revenues decline. Reported profit after tax came in lower at Rs 6 crore, down 95.8% YoY, on account of weak operating performance.
Sterlite Technologies has set an ambitious three years target of doubling revenues to Rs 10,000 crore by FY23, riding on higher digital infra needs owing to increased data usage and transforming into a solution provider from products company. Given the transformation into solutions based player, it expects the addressable market to expand to 75 billion U.S. dollar versus 30 billion U.S.dollar. It has also set a target to cut down on debt equities ratio to 0.5 times (in 3 years) from 1x currently, and maintain return on capital employed (RoCE) and dividend payouts of 20% up and approximately 30%, respectively.
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