Sterlite Tech zooms 7% on bagging Rs3,500cr order from Indian Navy-The Total Investment & Insurance Solutions

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26 February  2018

 

Sterlite Technologies Ltd (The Total Investment & Insurance Solutions)

Sterlite Technologies Ltd. has won an order to design, build and manage the Indian Navy’s communications network. The order is of great significance as this is the first time that an integrated naval communications network at such a scale is being built in India. The scope requires Sterlite Tech to also manage the communications network for over a decade through its system integration capabilities. The company is of the opinion that its experience with creating an intrusion-proof communication network for the Indian Army in Jammu & Kashmir will be leveraged for the Navy’s communications network.

Out of Rs3,500cr, 75% of the order value is to build the network and 25% for maintenance of the order. The order is likely to be executed over a period of 3-4 years. The current order book of the company is ~Rs4,600cr. This order, once finalized, will boost the order book significantly to ~Rs8,100cr.

STL is a leading manufacturer of optical products and provider of system integration services. The company’s capacity expansion in optical fibre cable (OFC) to 50mn fibre kilometres (fkm) by June 2019 (30mn fkm in September 2017) would help it leverage the increasing demand for OFC from global telecos w.r.t shift towards 5G network. Also, favourable government schemes in the domestic market would aid growth. Thus, its capacity utilization is expected to increase to 85-95% by FY19. We are positive on the stock’s prospects and expect revenue and PAT CAGR of 26.4% and 41.5% respectively (FY17-20E).

Sterlite Technologies Ltd is currently trading at Rs367.20 up by Rs23.6 or 6.87% from its previous closing of Rs343.60 on the BSE. The scrip opened at Rs354.90 and has touched a high and low of Rs378.75 and Rs352 respectively. So far 29,31,748(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs13,778.03cr.The Total Investment & Insurance Solutions