In an interview to CNBC-TV18, Anand Agarwal, CEO, Sterlite Tech spoke about the latest happenings in the company and way ahead. The company aims to start FY15 with a strong order book of Rs 2,550 crore.
"Both telecom and power businesses are seeing healthy order books," Agarwal said speaking from the sidelines of the HDFC Securities Investor Forum called Emerging Corporates 2014.
He further added that improvement seen in telecom business is due to additional fibre lines in India. Also, outlook continues to be positive and healthy across segment.
In Q4FY14, the company's net profit rose 89 percent to Rs 10.2 crore versus Rs 5.4 crore recorded in the same quarter a year ago. Its margins jumped to 10.5 percent in Q4FY14 from 7.5 percent, a year ago. "Margins are improving due to operational leverage on optical fibre," he added.
Going ahead, he expects volume/revenue growth of 20-25 percent in FY15.
Also Read: See 10% demand growth in FY15, to maintain margins, says Maruti
Below is the transcript of Anand Agarwal's interview with Ekta Batra & Reema Tendulkar on CNBC-TV18.
Ekta: Two of your key sectors that you provide transmission solutions to are telecom and power space. Can you give us a sense in terms of what your FY15 order book currently looks like and what it's broken up to between telecom and power?
A: In both telecom and power segment we are seeing healthy order book. The total order book would be close to Rs 2,400 crore. The telecom portion is increasing on the backdrop of great amount of fibre deployment that we see. What we are seeing in the country is that there is huge amount of data propagation and we are seeing good amount of fibre lines coming throughout the country backed by Reliance Jio expansion, the national optical fibre network as well as the fibre backhaul that is been created by people like Airtel, Vodafone etc. therefore, the outlook for the telecom definitely seems strong and on the power business with the new government, with the new investments coming through we see the power situation also improving. The other segment that we are also pretty invested in is in the infrastructure build, operate and transfer (BOT) segment and there we recently won a project which connects Punjab to Jammu & Kashmir and it's a pretty prestigious project bringing power to J&K. So, in all the three segments we are in different stages but definitely the outlook is very positive and healthy.
Reema: FY14 overall was a tough year for you, your revenues declined by close to about 20 percent in the year gone by with an improvement in order book and a better outlook for your various verticals, what can be the growth that we can expect in your revenues in FY15?
A: Typically we do not give out exact earnings but all sectors we are going to see growth, the overall growth would be between 20-25 percent while in FY14 our revenues degrew. We improved the margins and our margins grew and that was part of an overall approach that we have taken. We are consciously choosing the orders, consciously choosing the customers that we deal with and making sure that the value that we bring on the table is realized both by our customers and ourselves. Therefore, going forward we will see our revenue growth but on top of it we will see a faster margin growth.
Reema: When you said 20-25 percent growth in FY15, you are referring to the earnings growth rather than the revenue growth?
A: I am referring essentially to volume and revenue growth. The bottomline growth should be faster.
Ekta: For FY14 majority of your order book was international or export orders or maybe 50 percent. Was that a strategy which was undertaken for the company on purpose in order to hedge themselves from weak power demand in the domestic market?
A: We have always been hedged both on the domestic side as well as on the international side. On the domestic side last year power requirements were lower, so the exports positioning to that extent supported it even in the telecom business we have operations in India, in China, in Brazil, so while we have a very strong position in the Indian market whenever the Indian market goes through some sort of a correction or we would have a good hedged position as our global portfolio.
Sterlite Techno stock price
On May 28, 2014, Sterlite Technologies closed at Rs 44.45, up Rs 0.85, or 1.95 percent. The 52-week high of the share was Rs 45.70 and the 52-week low was Rs 15.75.
The company's trailing 12-month (TTM) EPS was at Rs 1.27 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 35. The latest book value of the company is Rs 31.32 per share. At current value, the price-to-book value of the company is 1.42.
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