We expect Sterlite's top-line to benefit significantly from the company's aggressive expansion plans across all its businesses - but particularly its energy business - in the medium term. We are also positive about the company's ability to fund its expansion plans in light of its strong balance sheet position, reflected in its robust cash balance of INR242 bn as of 30 September 2010....

On 16 July 2009, Sterlite Industries (India) Ltd. (Sterlite) announced a US$1.5 bn equity offering, in the form of American Depositary Shares (ADS), in order to help fund its ambitious power capacity expansion plans and to make further acquisitions. In light of our fundamental outlook at current price levels, coupled with the dilutive effect of this offering, we maintain our 6-12 month SELL rating. We will reassess our common stock rating after the…

We now believe that commodity prices have bottomed out. Production cuts by major commodity players have cut supplies, while massive stimulus spending by governments on infrastructure and construction should lift demand, lifting prices over the near-to-medium term. This is especially positive for Sterlite, given its position as one of the lowest-cost producers of aluminum and zinc, which enables it to generate healthy cash flows even when prices are depressed....