Sterlite Technologies Limited · NSE:STLTECH
Sterlite Technologies — FY2016 Earnings Presentation
37 slides from Sterlite Technologies's earnings presentation, May 27, 2016
Slide 1: Sterlite Technologies Limited Earnings Presentation
Sterlite Technologies Limited Earnings Presentation For the quarter and financial year ending March 31, 2016 27 May, 2016
Slide 2: Disclaimer
Disclaimer Certain words and statements in this communication concerning Sterlite Technologies Limited (“the Company”) and its prospects, and other statements relating to the Company’s expected financial position, business strategy, the future development of the Company’s operations and the general
Slide 3: Contents
CONTENTS Demerger Concludes 4 Overview of Sterlite Tech 8 Opportunity Landscape 13 Strategic Direction 19 Financials 28 Key Takeaway 36 22 3
Slide 4: Demerger Concludes: Sterlite Tech Now a Pure Play Telecom Focused Company
DEMERGER CONCLUDES: STERLITE TECH NOW A PURE PLAY TELECOM FOCUSED COMPANY New Company structure to accelerate execution and enable demonstration of superior performance Leaner structure to allow for simplicity and focus while enabling greater agility Implementing Customer centric alignments to
Slide 5: Sterlite Tech: Pre vs Post Demerger - Key Financial Metric
Values in INR Cr. STERLITE TECH: PRE Vs POST DEMERGER-KEY FINANCIAL METRIC Revenue EBITDA PAT 3,097 512 151 465 -9% -30% 2,161 Consol. FY15 Consol. FY16 Consol. FY15 Consol. FY16 -3 Consol. FY15 Consol. FY16 Sterlite Tech is pure play Telecom focused company post Demerger PAT surges to Rs 151 Cr
Slide 6: Sterlite Tech: Pre vs Post Demerger - Balance Sheet Metric
Values in INR Cr. STERLITE TECH: PRE Vs POST DEMERGER-BALANCE SHEET METRIC Net Debt Interest Cost Net Debt to Equity 4,882 327 4.5x -65% -69% -79% 113 1.4x 1,008 Consol. FY15 Consol. FY16 Consol. FY15 Consol. FY16 Consol. FY15 Consol. FY16 Significant deleveraging of the balance sheet, considerabl
Slide 7: Sterlite Tech: Pre vs Post Demerger - Return Profile Metric
Values in INR Cr. STERLITE TECH: PRE Vs POST DEMERGER- RETURN PROFILE METRIC Capital Employed ROCE (Pre-Tax) ROE (Post-Tax) 6,835 18% 22% 1,819 5% Consol. FY15 Consol. FY16 Consol. FY15 Consol. FY16 0% Consol. FY15 Consol. FY16 Capital Employed post demerger pertains to Telecom business only Sig
Slide 8: Sterlite Tech Overview
Sterlite Tech Overview
Slide 9: New Identity of Sterlite Tech
NEW IDENTITY OF STERLITE TECH Nation Building through Smarter networks Guiding Principles Customer centric approach Financial discipline and Capital Allocation Strategy We are transforming ourselves and the Business Model to serve our customers better New Identity, New Look & New Logo 9
Slide 10: What Sterlite Tech Offers: End to End Integrated Solutions
WHAT STERLITE TECH OFFERS Specialty Fibre Products Intrusion Proof Cables Bend Insensitive Optical Fibre Customized Cables For Varied Applications End to End Integrated solutions Raw materials Preform Optic fiber OF cable Full control over the entire value chain driven by capacities and capabilities
Slide 11: Sterlite Tech Has Succeeded at Each Generation of the Opportunity
STERLITE TECH HAS SUCCEEDED AT EACH GENERATION OF THE OPPORTUNITY Requirement 64 kbps <0.5 mbps + 16 Mbps + 100 mbps + 1G 2G 3G 4G /LTE & FTTH Application: Application: Application: Application: Basic Data Applications, Web sites, Richer text Music, Video Streaming, IoT, Connected Devices, email, di
Slide 12: Our Business Model Evolution
OUR BUSINESS MODEL EVOLUTION Global Geography India End-to-End Products & Business Mix System Software Integration 12
Slide 13: Opportunity Landscape
Opportunity Landscape
Slide 14: Our Product Business: Global Opportunity Landscape
OUR PRODUCT BUSINESS:GLOBAL OPPORTUNITY LANDSCAPE Optical Fiber Cable Global Data Traffic (OFC Consumption- Mn fkm) 364 (In Extabyte) 44 1,200 311 40 38 +17% 263 1,000 246 34 39 218 37 800 32 189 38 +205% 173 29 29 203 600 140 27 25 30 156 95 118 20 132 75 30 121 400 15 26 99 24 12 25 20 80 87 15 16
Slide 15: India Broadband Space
INDIA BROADBAND SPACE Population (Mn) vs Cumulative Fiber Deployed (Mn Fkm) % users above >4 Mbps 1,381 83% 1,320 1,060 41% 417 323 17% 99 US India China US India China Population Cummulative Fiber Deployed • Total Cumulative Fiber Deployed to Population Ratio in US is 1.3x, • India just has 17% of
Slide 16: Our e2e System Integration: India Opportunity Landscape
OUR e2e SYSTEM INTEGRATION:INDIA OPPORTUNITY LANDSCAPE +122% Cumulative Revenue +25% Cumulative Capex 245 Private Telco’s 196 Capex to grow Fiber Network Government: ~122% on the back Deployment Capex: $22.7 bn spend of growth in $3.6 bn next 3 years* next 5 years * revenues ~ 25% 60 • Unprecedented
Slide 17: Our Telecom Software Business: Global Opportunity Landscape
OUR TELECOM SOFTWARE BUSINESS:GLOBAL OPPORTUNITY LANDSCAPE Landscape in Telecom OSS/BSS Space Global OSS-BSS Market (in USD Bn, FY16-FY18) Specialized BSS/OSS 1 Pure play BSS/OSS System Integrators (SIs) 3 BSS & players 56 59 Business players Typically build on their Appz strong integration skills B
Slide 18: Our Market Strategy
OUR MARKET STRATEGY OSS BSS Network System Integration Integration Telecom Glass Fiber Cable Software Solutions & Services Build/Acquire Capabilities Products Grow Capabilities End to End Telecom Sustained Cash flows Execution Solution & Services Profitable Excellence Growth End to End Integrated Te
Slide 19: Strategic Direction
Strategic Direction 19
Slide 20: Strategic Direction
STRATEGIC DIRECTION E) Consistent Returns to the A) Market focused approach to Shareholders drive sustained profitable growth Strategic Direction D) Defined principles for B) Expanding ROCE for the Inorganic Growth business C) Disciplined Financial control 20
Slide 21: A) Market Focused Approach
A) MARKET FOCUSED APPROACH Offer pre-connected intelligent products and services to Telco’s Offer innovative business models for Network rollout New Fiber & Cables Smart Networks Products Building Fiber networks as brain and heart of CSP Increase capacities through minimal Capex & Debottlene
Slide 22: B) Targeted Expansion of ROCE
B) TARGETTED EXPANSION OF ROCE Increased proportion of cabling mix in business. ~ OFC Capacity ramped up to 15 Mn Increase proportion of Higher value products from 10% currently to 30% in 2018 on growing revenue base Cost leadership in manufacturing through increasing manufacturing yields thro
Slide 23: C) Reduce Debt Through Disciplined Financial Control
Values in INR Cr. C) REDUCE DEBT THROUGH DISCIPLINED FINANCIAL CONTROL Demerger has resulted in transfer of ~ Rs. 4,200 crore out of the Company’s Balance sheet Net Debt Post demerger debt - equity ratio has improved from 4.5x to 1.4x 674 Aim to reduce debt year on year from internal accruals
Slide 24: D) Inorganic Growth: Defined Principles
D) INORGANIC GROWTH : DEFINED PRINCIPLES System Telco Product & Solutions Integration Software (core) (targeted) (new) Technology innovation: Innovative product or OSS/BSS innovative Target Strategic Fit technology IoT, Education, Healthcare, portfolio NFV, & SDN Business ROCE 20%-30% EPS Accretive
Slide 25: E) Consistent Returns to the Shareholders
E) CONSISTENT RETURNS TO THE SHAREHOLDERS Dividend Payout History Consistent Dividend payment history 34% 31% 31% 29% Increasing ratio of profit sharing 28% Board announced a 50% Dividend ( highest ever) for our shareholders for FY’16 i.e 31% 16% Dividend payout 11% 10% 8% 8% 7% Stated Divid
Slide 26: FY16 Key Strategic Initiatives
FY 16 KEY STRATEGIC INITIATIVES Elitecore Acquisition Customer Centric Model Customer Units Private Telco’s India Public International Market Products & Offerings System Integration Telecom Software Solutions Research & Development Manufacturing Technology Delivery Solution Design Supply Chain Units
Slide 27: Recognitions & Achievements
RECOGNITIONS & ACHIEVEMENTS CII Industrial Innovation Award Sterlite Tech. received CII Industrial Innovation Award for being adjudged as one of the top 25 Innovative Company of CII Industrial Innovation award 2015 Category Frost & Sullivan India Manufacturing Award Sterlite Tech Won the Frost & Sul
Slide 28: Financials
Financials Notes: • On May 24th, 2016, Sterlite Tech had announced demerger effective from appointed date of 1st April, 2015. Post demerger, FY 16 performance is representative of only Telecom business. • The FY 15 reported numbers would not be comparable to FY 16 reported financial numbers. • The f
Slide 29: Financial Highlights
FINANCIAL HIGHLIGHTS • Revenue Growth remains strong at 34% YoY basis • OF Volumes at all time high at 20 Mn fkm Q4 & Fy16 • Cabling mix reverts to 27% from 22% in Q3 as ordering resumed Performance • Booked 479 crore of revenues from Services contributing 22% of total revenues • EliteCore ends the
Slide 30: Revenue Profile – Telecom Business
REVENUE PROFILE – TELECOM BUSINESS Revenue Profile Export by Region Africa Others 4% 1% Asia Export 15% 25% Europe CIS 30% 0% Middle East 9% India 75% Latin America 6% China 35% Exports 25%,of total sales China the major contributor to exports 30
Slide 31: Annual Financial Performance – Consol. Telecom Business
Values in INR Cr. ANNUAL FINANCIAL PERFORMANCE – CONSOL.TELECOM BUSINESS FY 15 FY16 FY 15 FY16 P&L Balance sheet (Adj. proforma) ( Audited) ( Adj. proforma) (Audited) Revenue 1,619 2,161 Net Worth 577 699 EBIDTA 345 465 EBITDA % 21% 22% Minority Interest 23 31 Depreciation 96 131 Net Debt 674 1,008
Slide 32: 5 Year Journey - Telecom Business: Consol. P&L Metrics
Values in INR Cr. 5 YEAR JOUNEY - TELECOM BUSINESS : CONSOL. P&L METRICS +28% 2,161 +36% 465 1,619 345 1,096 1,148 799 151 181 137 FY 12 FY 13 FY 14 FY 15 FY 16 FY 12 FY 13 FY 14 FY 15 FY 16 Revenue EBITDA 18% 18% +40% 334 249 8% 7% 8% 88 90 94 FY 12 FY 13 FY 14 FY 15 FY 16 FY 12 FY 13 FY 14 FY 15 F
Slide 33: 5 Year Journey - Telecom Business: Volume Analysis
Values in Mn fkm 5 YEAR JOUNEY - TELECOM BUSINESS : VOLUME ANALYSIS 20.1 +15% 7.7 +15% 17.7 6.5 13.8 5.2 11.7 12.5 4.6 3.7 FY 12 FY 13 FY 14 FY 15 FY 16 FY 12 FY 13 FY 14 FY 15 FY 16 OF Volume (Mn Fkm) OFC Volume (Mn Fkm) Volume of OF continues to growth @ of 15% CAGR levels Cabling volume also
Slide 34: Quarterly Financial Performance – Consol. Telecom Business
Values in INR Cr. QUARTERLY FINANCIAL PERFORMANCE – CONSOL. TELECOM BUSINESS +19% +6% +14% +16% 572 608 134 510 518 117 114 115 462 102 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Revenue EBITDA +3% +24% Revenue increased by 6% over last quarter 93 86 95 76 77 EBITDA gr
Slide 35: Quarterly Volume Analysis for the Telecom Business
Values in Mn fkm QUARTERLY VOLUME ANALYSIS FOR THE TELECOM BUSINESS +14% +2% -37% +23% 5.4 5.5 2.3 4.8 4.5 4.7 1.9 1.9 1.5 1.2 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 OF Volume(MnFkm) OFC (Mn Fkm) Demand for fiber continues to be strong both in India and international
Slide 36: Key Takeaways
KEY TAKEAWAYS Sterlite Tech is well placed to strengthen its leadership positon for connectivity enhancing products and solutions High ROCE & ROE business profile Focused on Customers & Stakeholders value creation Demerged company allows simplicity in business and focused Telecom play Impl
Slide 37: Thank You
GH: Sterlite Thank You