Sterlite Tech firms up after acquisition

Sterlite Technologies rose 2.88% to Rs 160.60 after the company said it will acquire 100% stake in UK-based Impact Data Solutions.

Sterlite Technologies (STL) announced the acquisition of IDS Group, a data centre network infrastructure design and deployment specialist based in the United Kingdom. As part of the overall transaction structure, STL will acquire 100% stake in UK based Impact Data Solutions (IDS) and its affiliate, together represented as IDS Group.

The privately held IDS Group is a niche solution provider of design and deployment offerings for hyper scale data centres. These solutions are for cloud and colocation providers coupled with containment solutions for inside data centres' infrastructure requirements. IDS is a key partner to two of the top four global cloud companies for their data centre connectivity needs with one relationship extending continuously for the last ten years. The company has a pan European presence with a dedicated partner ecosystem for flawless execution.

The transaction is structured to acquire 100%. Out of this 80% has been acquired, and the remaining 20% will be acquired based on an earn‐out model, over the next few years. It is an all cash deal financed by a combination of internal accruals and foreign currency debt instruments at an Enterprise Value of approximately 12 million GBP, representing 100% of share capital of the IDS Group.

The acquisition solidifies STL's position in the cloud and data centre market and brings access to two of the top global cloud providers into its customer pool. This acquisition brings STL one step closer towards its journey of expanding its addressable market to $75 billion by 2023.

Shares of STL lost 11.60% in the past two trading sessions to settle at Rs 156.10 yesterday, 25 September 2019, from its close of Rs 176.60 on 23 September 2019.

Meanwhile, the S&P BSE Sensex was up 355 points or 0.92% to 38,948.99. The market surged recently after the Finance Minister Nirmala Sitharaman on Friday, 20 September 2019, slashed corporate tax rate to 22% without exemptions. The effective corporate tax rate after surcharge now stands at 25.17%. The step has significant positive implications for corporates' profitability, broader economy and market valuations.

As on 31 March 2019, STL paid corporate tax of 34.03%.

On the BSE, 80,644 shares were traded in the STL counter so far compared with average daily volumes of 3.57 lakh shares in the past two weeks. The stock hit an intraday high of Rs 162.70 and an intraday low of Rs 158.25 so far during the day.

The stock hit a 52-week high of Rs 399 on 1 November 2018. The stock hit a 52-week low of Rs 96.65 on 23 August 2019.

STL's consolidated net profit fell 14.40% to Rs 141.38 crore on a 20.05% drop in net sales to Rs 1,431.99 crore in Q1 June 2019 compared with Q4 March 2018.

STL is engaged in designing, building and managing digital networks. Its digital networks focused business products, services and software includes optical communication products, network and system integration services and operations support systems (OSS)/business support system (BSS) software solutions.

Powered by Capital Market - Live News