Sterlite Technologies

Formed out of the demerger of telecom division of Sterlite Industries in 2000, Sterlite Technologies (STL) is the sole producer of optical fiber cables in India. It also produces telecommunication cables and power transmission conductors.

 

With an annualized growth rate of 47.58 per cent over the past five years, STL's revenue at the end of FY2009 stood at Rs 2,289 crore. Of the total revenue, 25 per cent (FY2009) comes from exports and the rest from domestic sales. At the end of November, 2009 the company has declared that it has got outstanding orders worth Rs 2,050 crore. It is also aggressively expanding its capacity in both the production of optical fibers and of power conductors. Though it is undergoing heavy capital expenditure for FY2009, STL has been able to reduce its debt to equity ratio from 1.2 to 0.8, while its return on capital employed has gone up from 13.6 per cent to 17.3 per cent.

 

Even though just 6 new mutual fund schemes added this stock to their portfolio over the past six months, the institutional interest has gone up consistently over the past six months (till September, 2009) to 19.09 per cent from 14.78 per cent. The stock has seen a phenomenal rally (522.92%) in the recent bull rally (March 9, 2009-November 27, 2009) from its level of Rs 48 to current price of Rs 303. Still, compared to its 3-year median P/E, the stock is still trading at 8 per cent discount. Considering its potential, it is a worthy stock to add to the portfolio.