Release Date: May 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sterlite Technologies Ltd (BOM:532374, Financial) has maintained a stable 8% market share in the global optical fiber cable market outside China.
- The company has achieved a significant year-on-year expansion in optical connectivity attached rates, increasing from 13% to 22%.
- Sterlite Technologies Ltd (BOM:532374) is well-positioned to capitalize on the growing demand for optical fibers, driven by 5G, FTTX, and data centers.
- The company has a strong innovation engine with 740 patents and 76 new filings in the year, focusing on next-gen capabilities like hollow core fiber and AI-driven fiber sensing.
- Sterlite Technologies Ltd (BOM:532374) is committed to sustainability, aiming for net zero by 2030 and has already installed 4,500 kilowatts of solar capacity.
Negative Points
- The company faces challenges from tariffs imposed by the US and Europe, which could impact profitability.
- Sterlite Technologies Ltd (BOM:532374) has seen a decline in global market share from 11% to 8%, indicating competitive pressures.
- The BEAD program in the US, which could drive demand, faces potential delays and uncertainties regarding its rollout.
- The company has a high net debt of 1,350 crore, with a debt to equity ratio of 0.68 times, which it aims to reduce.
- Shareholder returns have been a concern, with equity returns for minority shareholders being described as 'pathetic' by an investor.
Q & A Highlights
Q: How will the recent US tariff on optical fiber impact Sterlite Technologies?
A: Ankit Agarwal, Managing Director, explained that while the tariff poses challenges, Sterlite is appealing the decision with the European Commission. The company is focusing on cost structures in India, Italy, and the US to remain competitive. They are optimistic about passing some costs to customers as demand in North America improves. Additionally, US customers are showing interest in sourcing from Sterlite's US and Indian facilities.
Q: What is the timeline for Sterlite Technologies to regain its lost market share?
A: Ankit Agarwal stated that the company is well-positioned with its capacities and product portfolio. As demand returns, they aim to increase utilization from 50% to 70%, which should improve EBITDA margins from 14% to 20%. The goal is to be among the top three global players in the optical business within 3 to 5 years.
Q: How will changes in the US BEAD program affect Sterlite Technologies?
A: Ankit Agarwal noted that while there are ongoing discussions about the program's specifics, Sterlite expects the BEAD program to progress, potentially starting in Q4 this year or Q1 next year. The company is focusing on current and new customers to drive growth and anticipates that simplified permitting processes in the US could accelerate infrastructure build-outs.
Q: What is Sterlite Technologies' strategy for the data center market?
A: Ankit Agarwal highlighted that Sterlite is developing an end-to-end solution for passive connectivity in data centers. They have a strong portfolio for inter-data center connectivity and are working on technologies for within data centers. The company aims to derive 25% of its revenue from the data center and enterprise segments in the coming quarters.
Q: How does Sterlite Technologies plan to address shareholder concerns about equity returns?
A: Ajayjanjari, CFO, emphasized that Sterlite is focused on improving margins and generating cash to enhance shareholder value. The company is targeting a net debt to EBITDA ratio below 2 and is committed to leveraging its optical business and STL Digital to drive growth and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
