This Midcap Stock From Cables Sector Approves Right Issue, Should You Buy?

Sterlite Technologies Ltd (STL), a leading optical and digital solutions company operating in the cable sector has approved the proposal of fund raising up to Rs 500 crores via the rights issue of equity shares. Sterlite Technologies (STL) is a leading telecommunication infrastructure player with offerings in optical fibre (OF) and optical fibre cables (OFC), hyper-scale network design, and deployment and network software. It is a midcap stock with a market capitalisation of Rs 7,210.86 crore.

ICICI Direct has recommended the investors to buy the stock of Sterlite Technologies with a target price of Rs 220 apiece which implies a potential upside of up to 22% from its current market price if purchased at the current market price. To Know more, check the details below:

Sterlite Technologies' Stock Performance and Outlook

The share price of Sterlite Technologies last traded at Rs 181.05 apiece on NSE, gaining 3.46% as compared to its previous close of Rs 175 apiece. Its 52-week low is Rs 128.60 apiece and 52-week high is Rs 242.80 apiece, respectively. The stock has fallen 3.88% in the past 1 week, and gained 3.02% in the past 1 month, respectively. It has gained 11.11% in the past 3 months, whereas, it has fallen 11.75% in the past 1 year. In the past 3 years, it gave maximum 44.9% positive return. However, in the past 5 years, it has fallen over 50%. 

Sterlite Technologies' Board Of Directors Approves Rights Issue

The Board of Directors of Sterlite Technologies Limited, at its meeting held on January 27, 2023, has approved the proposal of fund raising According to its regulatory filing to BSE/NSE, "Proposal of fund raising upto INR 500 Crores through the issuance of such number of fully paid-up equity shares / partly paid-up equity shares of face value of ₹2 each as may be decided by the Board or the duly authorised Rights Issue Committee of the Board, by way of a rights issue to the existing shareholders of the Company whose name appears on the register of members of the Company or on the list of depositories as beneficial owners at the end of the business hours on such date as may be hereafter fixed by the Board as of the record date ("Eligible Equity Shareholders"), or to such person or persons who may or may not be an Eligible Equity Shareholder of the Company in whose favour the rights may be renounced (in full or in part) by respective Eligible Equity Shareholders or in whose favour the Board may, in its discretion, allot Equity Shares in the rights issue." 

It added, "For the purposes of giving effect to the rights issue, the detailed terms in relation to the rights issue, including but not limited to the issue price, issue structure, rights entitlement ratio, record date, timing and terms of payment will be determined and disclosed to the exchange in due course by the Board and / or the Rights Issue Committee. The promoter and promoter group of the Company have confirmed that they will subscribe to the full extent of their aggregate rights entitlement." 

ICICI Direct Recommends buy Sterlite Technologies

According to the brokerage, STL's share price has grown ~19% over last five years. STL is uniquely positioned to benefit from 5G/ FTTH deployment cycle both domestically and globally. We believe that with focus on ramping down/exiting loss making segment and improving services segment profitability, STL will likely see a healthy earnings momentum ahead. Thus, we maintain BUY rating Target Price and Valuation: We value STL at Rs| 220, at 15x FY25 P/E. 

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.