Sterlite Technologies Analysis

dividend

Pros

• Dividends per share have increased over the past 10 years.
• Dividends paid are well covered by earnings (3.1x coverage).
• Dividends after 3 years are expected to be well covered by earnings (3.5x coverage).
• Sterlite Technologies's pays a higher dividend yield than the bottom 25% of dividend payers in India (0.76%).
• Sterlite Technologies's dividend is above the markets top 25% of dividend payers in India (3.08%).

Cons

• Dividends per share have been volatile in the past 10 years (annual drop of over 20%).

future

Pros

• Sterlite Technologies's earnings growth is expected to exceed the low risk savings rate of 7.2%.
• Sterlite Technologies's earnings are expected to increase by more than the low risk growth rate in 3 years time.
• Sterlite Technologies is expected to efficiently use shareholders’ funds in the future (Return on Equity greater than 20%).
• Performance (ROE) is expected to be above the current IN Communications industry average.
• An improvement in Sterlite Technologies's performance (ROE) is expected over the next 3 years.
• Sterlite Technologies's revenue growth is expected to exceed the India market average.

Cons

• Cash flow for Sterlite Technologies is expected to increase but not above the 50% threshold in 2 years time.
• Sterlite Technologies's earnings are expected to grow by 13.8% yearly, however this is not considered high growth (20% yearly).
• Sterlite Technologies's earnings growth is positive but not above the India market average.
• Sterlite Technologies's earnings are expected to decrease over the next year.
• Sterlite Technologies's net income is expected to increase but not above the 50% threshold in 2 years time.
• Sterlite Technologies's revenue is expected to increase but not above the 50% threshold in 2 years time.
• Sterlite Technologies's revenue is expected to grow by 10% yearly, however this is not considered high growth (20% yearly).

health

Pros

• Sterlite Technologies is profitable, therefore cash runway is not a concern.
• Sterlite Technologies is profitable, therefore cash runway is not a concern.
• Debt is well covered by operating cash flow (31.6%, greater than 20% of total debt).
• Debt is covered by short term assets, assets are 1.7x debt.
• Sterlite Technologies's cash and other short term assets cover its long term commitments.
• The level of debt compared to net worth has been reduced over the past 5 years (350% vs 108.8% today).
• Interest payments on debt are well covered by earnings (EBIT is 3.7x coverage).

Cons

• Sterlite Technologies's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
• Sterlite Technologies's level of debt (108.8%) compared to net worth is high (greater than 40%).
• High level of physical assets or inventory.

management

Pros

• The tenure for the Sterlite Technologies board of directors is about average.
• The average tenure for the Sterlite Technologies management team is over 5 years, this suggests they are a seasoned and experienced team.

Cons

• Anand's remuneration is higher than average for companies of similar size in India.
• Anand's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

misc

Pros

Cons

• Sterlite Technologies has significant price volatility in the past 3 months.

past

Pros

• Sterlite Technologies has delivered over 20% year on year earnings growth in the past 5 years.
• Sterlite Technologies used its assets more efficiently than the IN Communications industry average last year based on Return on Assets.

Cons

• Sterlite Technologies's 1-year earnings growth is negative, it can't be compared to the 5-year average.
• Sterlite Technologies's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).
• Whilst Sterlite Technologies has efficiently used shareholders’ funds last year (Return on Equity greater than 20%), this is metric is skewed due to its high level of debt.
• Sterlite Technologies's 1-year earnings growth is negative, it can't be compared to the IN Communications industry average.

value

Pros

• Sterlite Technologies's share price is below the future cash flow value, and at a moderate discount (> 20%).
• Sterlite Technologies is good value based on expected growth next year.
• Sterlite Technologies is good value based on earnings compared to the IN Communications industry average.
• Sterlite Technologies is good value based on earnings compared to the India market.
• NSEI:STRTECH is up 1.8% along with the Communications industry (2.1%) over the past month.

Cons

• Sterlite Technologies's share price is below the future cash flow value, but not at a substantial discount (< 40%).
• Sterlite Technologies is overvalued based on assets compared to the IN Communications industry average.
• STRTECH underperformed the Communications industry which returned -29.7% over the past year.
• STRTECH underperformed the Market in India which returned -14.5% over the past year.
• NSEI:STRTECH is up 1.8% underperforming the market in India which returned 8% over the past month.