M NEYBEE MONEYBEE SECURITIES PVT.LTD.

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ONE PAGE REPORT 11/01/2008

Company Sterlite Technologies Ltd.

Industry Cable, Telecom, Optical
Industry View Positive
Promoters Anil Agarwal
Website www.sterlitetechnologies.com
Face Value Rs.5/-
Book Value 67
EPS (TTM) 11.66
P/E 27
Dividend Yield 0.23

Investment Rationale:

Sterlite Technologies Limited(STL), part of Vedanta Group, is engaged in following business activities:
• Telecom(35%): Optical Fiber(OF) & Optical Fiber Cable(OFC) [20%]; Copper Cable/Access Business (CC)
[15%]
• Power(65%): Conductor[65%]

STL’s plants are located at Aurangabad (OF), Rakholi (OFC), Silvassa (CC), Dadra (Structured Cable), Silvassa &
Haridwar (Conductor). STL’s Conductor plants are located in tax free areas. Globally lowest cost producer
attributed by its integrated plant structure for manufacturing OF & Conductor.

STL’s numbers speaks for itself. Company posted 48% & 119% growth in sales for the year FY06 & FY07
respectively. OF has an OPM of 25% whereas OF along with OFC has OPM of 15-17%. STL has an edge over its
competitors of around 1.5% in OPM.

STL is the largest producer of conductor with 23% market share. Globally STL is 7th largest Optical fiber
manufacturer with market share of 46% & 12% in India & China respectively. STL has a cumulative
manufacturing capacity of 115000 MT placing it amongst 5th largest producers of power conductors globally.

5 patents were registered in FY07 and more than 70 applications were filed for product & process patent.

STL exports to over 38 countries and Exports contribute over 25% of revenue.

Growth in volume has been registered due to over 50% increase in capacity of conductors & OF. STL has
recently announced expansion of it’s OF capacity to 12 million sq. km. which amounts to 3 times of its existing
capacity in 2007.

For the quarter ended Sep 07, STL has OPM of 20%, 13% & 11% from OF, Conductors & CC respectively.

Healthy order book position at Rs. 1100 Cr. STL is converting copper cable capacity to structured data cable,
which has higher demand & better margin. STL will gain maximum from price increase in OF as it manufactures
from Silicon, the basic raw material available locally.

Growth Chart
Operating Income Operating Profit Net Profit
YoY 2006 YoY 2005 to YoY 2006 YoY 2005
to 2007 2006 FY 2006-07 FY 2005-06 to 2007 to 2006
Sterlite Technologies Ltd. 48% 119% 40% 76% 25% 299%

Pros & Cons:

STL is market leader in all segments of operation. Companies in this segment are not comparable since STL
operates in various segments. Lowest cost structure, competitive technology & continuous thrust on technology
up-gradation make an attractive bet at Rs. 300. We maintain a price target of Rs. 600 over a 12-15 months horizon
implying upside potential of 100%.
P.T.O.
 STERLITE TECHNOLOGIES LTD. FINANCIALS

FY 07-08 Capacity Capacity Capacity Realisation Net Sales OPM OP

Utilisation Utilised Rs/Unit Cr. Cr.
Power 0.012 60% 0.007 140000 966 12% 116
transmission
Copper cable 0.95 30% 0.29 900 256.5 10% 25.65
Optic fiber 0.60 75% 0.45 340 153 25% 38
Optic fiber 0.32 38% 0.12 1200 145.92 15% 22
business
Total 1521 202

FY 08-09 Capacity Capacity Capacity Realisation FY 07-08 OPM OP

Utilisation Utilised Rs/Unit Cr. Cr.
Power 0.012 80% 0.009 140000 1,288 15% 193
transmission
Copper cable 0.95 50% 0.475 900 428 12% 51.3
Optic fiber 0.60 90% 0.540 340 184 25% 46
Optic fiber 0.32 55% 0.176 1200 211 18% 38
business
Total 2110 328

Financials FY 07-08 % Chg FY 08-09 % Chg

Cr. Cr.
Net Sales 1,521 27% 2,110 39%
EBDITA 202 74% 328 63%
Depreciation 39 23% 45 16%
Interest 44 38% 47 8%
PBT 119 125% 237 98%
Tax 21 841% 43 104%
PAT 99 94% 194 97%
No. of Shares 6 6
EPS Rs. 15 94% 30 97%
Cash EPS Rs. 21 66% 37 74%

- Riken Mehta