Sterlite technologies (Complete analysis in हिन्दी )



subscribe to value educator channel to get correct information related to stock market Welcome to Value educator channel where you learn how to invest in stock market and create wealth I am shashank. Today we will discuss about sterlite technologies. We will check their business model, how they get their profit, we will discuss about their valuations also. Then we will check if stock is available at good levels for buying.They declared Q4 2019 yesterday, we will discuss about that also. So lets start ! Sterlite Technologies is related with fibre optics so first we will discuss about that in detail. As you know, now a days usage of data is increased. We use data in mobile to watch videos, we watch netflix, amazon prime As Jio launched there plans for cheap data, due to that usage of data in last 2-3 year increased. It is estimated that, data will be used more in future. Initially landlines were used by us, which is wired communication and copper wire was used for communication. After that mobile phones launched and now we communicating without wire. Now you must be thinking if we are communicating without wire then whats the use of wire ? We get signal to our mobile from communication towers which is located near your residence. All the towers of different areas are connected by fibre optic cable In next 1-2 years 5G can start and more fibre optics will be used in 5 G. To get 10 gbps speed of data,to handle this speed fibre is the only solution for now. Because communication is fibre is done with speed of light which is fastest There wont be much lag for videos and they can play smoothly on higher resolutions. So for that fibre optics is best solution for now. We will check now from which all segments sterlite technologies get their business revenues. So they get their revenues from 2 major segments which are products and services In there product side, they have 2 different products one is optical fibre and another is cable division.For optical fibre they have capacity of 30 million fkm and now they are expanding it to 50 million fkm. They already completed extra 10 million fkm capacity till dec 2018 and remaining 10 million fkm will be completed till june 2019 So total capacity will be 50 million fkm Apart from this they have 15 million km capacity for cabling and they recently did acquisition in Europe so by that they added another 3 million km to there capacity and sterlite Technologies doing expansion of another 15 million km So there total cabling capacity will be 33 million km Total 1200 cr capex is needed foe that and they did some capex in FY 2019 and renaming of 500 cr will be done in FY 2020 After completion of this expansion company will have 50 million fkm fibre optics capacity and 33 million cabling capacity. Silicon is needed to manufacture fibre optics which is called as preform and sterlite technologies is leader in India and its one of top 10 in whole world so i future as demand for data will increase, so demand for fibre optics will also increase. As 5G will come in next 2-3 years, so they want to build all infrastructure before that. Fibre will be major part of 5G So speed of data in 5 G will increase and for now fibre is the only solution for that. In there software and services segment they get their revenues from 4 different segments which are communication service providers, internet content providers,defence and citizen networks Recently in defence segment they got order of 3500 cr from Indian Navy and Sterlite will be building networking in India for navy in next 2 years. Apart from this they are developing and designing networking in smart cities, one of such project they developed in andhra pradesh at kakinada smart city. They getting 30-35% revenues from services and software segment and remaining are from product side In services are software they get 11-12 % and from product side they get margins of 23-25% Company is focus on this as they get good margins from this segment. Now we will discuss about 5G as i mentioned, your mobile is linked with communication tower near your residence but all such towers are connected bt fibre optic cable. So in 5G total towers in that particular area will increase as speed will be higher and more users can access it. As there will be more towers, fibre requirement will also increase which is used to connect them. It is estimated that demand for fibre optics will increase 10 times. 7.7 Billion is total population in world and devices connected to internet are 23 billions which means 1 human is using more than device as we all have laptops,mobile and watches which are connected to internet. It is estimated that till 2025 these devices will become 75 billions So for that all telecom companies like bharti airtel, Jio,Idea,vodaphone, AT&T are doing capex and in 2017 it was of $200 billion They wanted to create this infra and want to launch 5G as soon as possible So after checking all this we can estimated that in future more data will be consumed and fibre optics will be needed for that As you can see, from 1970 to 2008, in 38 years 1st billion fibre km completed and now from 2016 to 2018 in 2 years we moved from 3 billion km to 4 billion km, which means we manufactured same fibre in 2 years compared to 38 years in past. So you can see demand for fibre optics is increasing as demand for data is increasing. Fibre optics is best solution to transfer data for now as it travels at speed of light. Yesterday they declared their Q4 2019 results, in which their revenues grown by 100% compared to last qtr and profits grown by around 50% There is one problem here that, their margins have gone down. They used to get 23-24% margins now it has fallen to 17-18% As i mentioned earlier, they get 70% of their revenue from products and 30% from services. In this qtr almost 50% revenues came from services in which they have margins of 11-12% which are lesser compared to products so their overall margins got reduced. Another reason for this is, they used to get $7-$8 per km after selling fibre optics now it reduced a bit and came near to $7 so that is another reason for reduction in margins In 2019 their total revenues are around 5000 cr and their order books is 10500 cr so its 2 times revenues, which is good and company have visibility of revenues at least for next 2-2.5 years Debt is bit negative here, in 2018 they had debt of 900 cr and now it has increased to 1700 cr and major reason for this is their capex which are going on for fibre optics and cable segment and they acquired one company from Europe recently so debt gone up. But i am fine with that and i am holding this stock in my portfolio and now its available around 15 PE. As this is growing company their free cash flows will be less. I am confident about this company because as data consumption will increase, demand for fibre optics will also increase and sterlite is global player and leader in India. So this is good business, valuations wise it may be bit expensive but if i get it in corrections i will add more in it and we should create good we lath out of it in long term Please like the video and subscribe to channel and click on bell icon to get notified whenever we upload new video. So we will stop here for this video, next video we will check some other business and we will do complete analysis of it.

22 Comments

  1. Value Educator said:

    One can Reach me at 8 7 7 9 0 6 4 8 9 9 (whtsapp same no) or [email protected] for queries or discussions !

    June 26, 2019
    Reply
  2. Sandeep Naik said:

    Sir what about vindhya telelinks…

    June 26, 2019
    Reply
  3. Kishor Kurhe said:

    Promoters now removed all their pledged shares. Should buy now or not ? And why ? Sir please suggest.

    June 26, 2019
    Reply
  4. dinesh kumar said:

    What is your take on that fact that more than 90 percent of the promoters share are pledged.

    June 26, 2019
    Reply
  5. Vineeth Jain said:

    Very well explained sir..

    June 26, 2019
    Reply
  6. SIVANSHUMAN said:

    Purchased sterlite @167.55

    June 26, 2019
    Reply
  7. Mohamed Areif said:

    Hi, your Rain industries playlist is unavailable.

    June 26, 2019
    Reply
  8. The Goldcobra said:

    Nice one bro!! Good information love your efforts

    June 26, 2019
    Reply
  9. Shailendra Singh said:

    Good video..
    Few observations
    Don't shake ur hands, it shows that u r underconfident.
    Don't be monotonous
    Show facial expressions

    June 26, 2019
    Reply
  10. rupesh kumar said:

    Thanks. For grt info

    June 26, 2019
    Reply
  11. utpal malakar said:

    Sir,, share pleadge karke promotor kaha pe invest Kiya hai?

    June 26, 2019
    Reply
  12. Pushkar Chand said:

    1 lack ka achha sa portfl bata do sir nxt week mndy k liye

    June 26, 2019
    Reply
  13. goutam dawn said:

    2025>800+

    June 26, 2019
    Reply
  14. Rahul Prabhune said:

    Thanks sir, every stock has bad days and it is chance to accumulate good stock at low price

    June 26, 2019
    Reply
  15. mudassir alsulkar said:

    Bought @214 the time zone when this price will be achieved Since it is falling??
    Can suggest!!!

    June 26, 2019
    Reply
  16. Balajii Prasanth said:

    Good sir

    June 26, 2019
    Reply
  17. it's all about Entertainment said:

    Hello sir,
    I have 90 shares of sterlite techno with Avg 235 rs and it's going down day by day even with good results of Q4.
    What should I do now? Hold or sell..

    June 26, 2019
    Reply
  18. Amit Mahajan said:

    These is the powerhouse of knowledge..Great work Shashank, keep posting videos

    June 26, 2019
    Reply
  19. AVADHUT MASKAR said:

    Promoter pledged 96 % holding

    June 26, 2019
    Reply
  20. kanaga raju said:

    What is the fair price to enter into this stock ?

    June 26, 2019
    Reply
  21. Yogesh Suda said:

    Thanks for all details, added too

    June 26, 2019
    Reply
  22. SIVANSHUMAN said:

    Good.
    Nice share

    June 26, 2019
    Reply

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