Sterlite Technologies Q2: ₹14 Crore Loss, 5.42% Revenue Drop
Company Overview
Sterlite Technologies Limited (STL) is a global leader in end-to-end data network solutions. The company designs and deploys high-capacity fiber cables and wireless networks, collaborating with telecom companies, cloud providers, citizen networks, and enterprises to build and manage cloud-native networks. Founded in 2000 after a demerger from Sterlite Industries, STL has expanded its manufacturing presence across Aurangabad, Pune, Silvassa, and Haridwar. Since its inception, STL has advanced through innovation and strategic acquisitions. In the early 2000s, it significantly increased fiber optic and copper cable capacities and launched several broadband and network access products. STL was recognized as one of India’s fastest-growing technology companies.
The company’s global reach expanded through acquisitions, including stakes in Sterlite Infrastructure, Jiangsu Sterlite Tongguang Fiber (China), and Sterlite Conduspar (Brazil). In 2015, it acquired the power transmission business and later demerged it as Sterlite Power Transmission Ltd. in 2016. From 2018 to 2023, STL acquired Metallurgica Bresciana (Italy), IDS Group (UK), and Optotec S.p.A. (Italy), bolstering its role in data networks and optical products. In 2022, STL streamlined its portfolio by divesting assets like IDS Group and telecom software business. The launch of Fiber-to-the-Room (FTTR) services in 2023 reinforces its commitment to delivering high-speed data infrastructure solutions globally.
Industry Outlook
The fiber optics and data network solutions sector is set for robust growth in FY25, driven by the rising global demand for high-speed connectivity, propelled by 5G, AI, IoT, and expanding data centers. Sterlite Technologies Limited (STL) has a promising outlook with multiple key growth drivers across its core markets and product lines. STL anticipates sustained demand for fiber as global clients continue to expand network infrastructure. Analysts project a solid 7% demand growth (excluding China) in the coming years, with North America and India expected to see accelerated growth. With the rapid rise of AI and data centers, STL is well-positioned to benefit from increased fiber requirements. Modern, GPU-dense data centers need up to 36 times more fiber than traditional CPU-based centers. STL’s focus on compact, high-density optical fiber solutions provides 70% more fiber per unit than standard installations, targeting this specific need. The company aims to capture a share of the $5.7 billion investment anticipated in the data center market. At IMC 2024, STL launched its AI-DC portfolio, supporting the “Make in India” initiative and addressing the increasing demand for advanced data center infrastructure. STL is targeting 25% of its revenue from data center and enterprise products in the medium term, aligning with its strategy to leverage the AI and data revolution. Additionally, a growing emphasis on sustainable, energy-efficient infrastructure, in line with ESG standards, is shaping the sector. Increased investments in digital infrastructure and advanced network solutions are expected to propel growth, benefiting companies like STL.
Business Segments
Sterlite Technologies Limited (STL) operates across several core business segments, focusing on comprehensive data network and digital infrastructure solutions.
- Optical Fiber and Cable Solutions: STL is a leading provider of high-capacity optical fiber cables and solutions, essential for telecom and network infrastructure. This segment includes high-density, compact fiber cables, which cater to growing data demands, particularly in 5G networks and data centers.
- Network Services: STL offers network design, deployment, and maintenance services for telecom operators, cloud companies, and large enterprises. This segment focuses on building and managing end-to-end network infrastructure, including wireless networks, fiber-to-the-home (FTTH), and other network expansions.
- Data Center Solutions: This segment includes STL’s newly launched AI-DC (Artificial Intelligence-Data Center) portfolio, which supports the increasing data needs of modern, GPU-dense data centers. STL provides high-density fiber solutions specifically designed for data centers, aiming to capture a significant share of the growing data center market.
- Enterprise Network Solutions: STL serves various enterprises by providing tailored digital network solutions, including cloud-native, software-defined networks, which help optimize network performance and scalability for corporate clients.
- Digital and System Integration: STL’s digital and integration services support clients in deploying and managing advanced network solutions, integrating software-defined networking (SDN), network function virtualization (NFV), and cloud infrastructure.
- Sustainability and ESG-Focused Solutions: STL incorporates energy-efficient, sustainable infrastructure solutions across its offerings, aligning with Environmental, Social, and Governance (ESG) standards.
Key Subsidiaries and Their Information
Sterlite Technologies Limited (STL) has a global footprint with several key subsidiaries that support its operations in network solutions, digital transformation, and manufacturing across various regions. Here are some of its prominent subsidiaries and their functions:
- Sterlite Tech Cables Solutions Limited – A core subsidiary focused on manufacturing advanced fiber-optic and cable solutions, catering to STL’s global network deployment needs.
- STL Digital Limited – Engages in digital solutions and services, playing a critical role in STL’s diversification into digital transformation and enterprise services.
- Sterlite (Shanghai) Trading Company Limited – Supports STL’s operations and sales within China, a significant market for optical fiber and telecom solutions.
- Sterlite Tech Holding Inc. (USA) – This U.S.-based subsidiary enables STL to expand in North American markets, providing optical and digital solutions to local clients.
- Metallurgica Bresciana S.p.A. – An Italian subsidiary specializing in high-end optical and metal cables, acquired to bolster STL’s manufacturing capabilities and expand in Europe.
- STL Optical Interconnect S.p.A. – Based in Italy, this subsidiary focuses on optical interconnect products essential for data centers and high-speed networks, enhancing STL’s position in advanced optical solutions.
- Sterlite Technologies DMCC (Dubai) – Supports the Middle Eastern and African markets, aligning with STL’s global expansion strategy for network and digital solutions.
- Clearcomm Group Ltd (UK) – Acquired to strengthen STL’s services portfolio in the UK, focusing on network deployment and management services for European clients.
- Jiangsu Sterlite Fiber Technology Co. Ltd. (China) – A joint venture that manufactures optical fiber solutions, providing STL with a competitive edge in the Asian market.
These subsidiaries are pivotal in driving STL’s growth strategy, enhancing its capabilities in manufacturing, digital services, and global market outreach.
Q2 FY25 Highlights
- In Q2 FY25, Sterlite Technologies Limited (STL) reported a revenue of INR 1,413 crore. While optical fiber cable (OFC) volumes decreased on a year-on-year basis, there was an improvement in both volumes and revenues when compared quarter-on-quarter. This reflects a positive trend despite the annual decline in volumes.
- EBITDA margin of 10.7%. This decline in margins was attributed to lower optical fiber cable (OFC) volumes on a year-on-year basis. However, there was a positive shift, with improved margins observed when comparing quarter-on-quarter performance. This indicates a recovery in operational efficiency despite the annual volume challenges.
- Company reported PAT (Profit After Tax) loss of INR 13 crore, showing improvement as losses reduced on a quarter-over-quarter basis. This indicates the company is making progress, likely through cost optimizations or revenue improvements, signaling a move towards profitability.
- As of H1 FY25, the company’s Net Debt stands at INR 2,169 crore, with a Debt-to-Equity ratio of 0.74. This ratio reflects the company’s current leverage and financial stability at the mid-year mark.
- Sterlite Technologies Limited (STL) has secured large orders from a leading American customer and a major UK telecom operator for optical connectivity and fiber solutions. Additionally, the company is working with an Indian private telecom player to enable Fixed Wireless Access (FWA) deployment, alongside securing long-term contracts for fiber cable supply from another large Indian telecom provider. STL has also achieved significant deals in Italy for optical fiber cables and specialty cable products.
Financial Summary
| INR in Cr. | Q2FY25 | Q1FY25 | Q2FY24 | Q-o-Q(%) | Y-o-Y(%) |
| Revenue* | 1,413 | 1,218 | 1,494 | 16.01% | -5.42% |
| EBITDA* | 151 | 93 | 216 | 62.37% | -30.09% |
| EBITDA % | 0 | 0 | 0 | 38.96% | -25.69% |
| Depreciation | 83 | 82 | 85 | 1.22% | -2.35% |
| EBIT* | 68 | 11 | 131 | 518.18% | -48.09% |
| Finance Costs | 84 | 71 | 95 | 18.31% | -11.58% |
| Exceptional Items | – | – | – | ||
| PBT* (Before share of Associates and JV) | -16 | -60 | 36 | 73.33% | -144.44% |
| Tax | -3 | -13 | 12 | 76.92% | -125.00% |
| Net Profit* (After minority Interest & share of JV) | -13 | -47 | 28 | 72.34% | -146.43% |
| Profit (loss) from discontinued operations | -1 | -1 | 6 | 0.00% | -116.67% |
| Net Profit | -14 | -48 | 34 | 70.83% | -141.18% |
| Diluted Normalized EPS | -0.26 | -0.97 | 0.71 | 73.18% | -136.71% |
SWOT Analysis of Sterlite Technologies
Strengths:
- Global presence and integrated business model
- Strong focus on innovation and R&D
- Robust order book
Weaknesses:
- Heavy reliance on telecom sector
- Profitability pressures and high debt
- Limited vertical integration in some areas
Opportunities:
- Growth from 5G rollout and government digital initiatives
- Rising demand for data centers and new tech diversification
Threats:
- Intense competition and regulatory risks
- Technological disruptions and forex fluctuations