Sterlite Technologies Limited — Q1 FY26 earnings call

Call held 25 Jul 2025

Management summary

Sterlite Technologies Limited delivered a strong Q1 FY26, marked by a 17% YoY revenue growth to ₹1019 crores and a return to profitability with a PAT of ₹10 crores. The company secured robust order intake of ₹1529 crores, nearly tripling YoY, and expanded its open order book to ₹4888 crores, indicating strong future revenue visibility. Strategic focus on data centers, next-gen fiber, and market share gains in key geographies underpins confidence in continued profitable growth, despite a temporary increase in employee costs.

Highlights

  • Consolidated Revenue grew 17% YoY to ₹1019 crores in Q1 FY26, reflecting healthy demand and strong execution.

  • Consolidated EBITDA margin expanded to 13.7% (₹140 crores), a significant improvement from the previous year.

  • The company achieved a PAT of ₹10 crores from continued operations, turning around from a loss of ₹48 crores in Q1 FY25.

  • Order intake for Q1 FY26 was ₹1529 crores, nearly tripling from ₹566 crores in Q1 FY25, driven by long-term contracts.

  • The open order book increased to ₹4888 crores, providing solid revenue visibility for FY26 and beyond.

Concerns

  • Employee cost increased quarter-on-quarter from ₹142 crores to ₹156 crores, representing 14% of sales in Q1 FY26, above the annual target range of 10-12%.

Key financials

  1. Consolidated Revenue ₹1,019 Cr +17%YoY
  2. Consolidated EBITDA ₹140 Cr
  3. Consolidated EBITDA Margin 13.7%
  4. Consolidated PAT (from continued operations) ₹10 Cr

What they filed

Q1 FY27: revenue up 87.4%, net profit up 1870.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,074 998 1,052 1,019 1,034 −4%1,257 +26%1,441 +37%1,910 +87%
EBITDA117 106 125 132 129 +10%120 +13%195 +56%385 +192%
Net profit-14 -24 -40 10 4 +129%-17 +29%59 +248%197 +1870%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹1,025 Cr Total
  • Optical Network Business ₹961 Cr 93.8%
  • STL Digital ₹64 Cr 6.2%

Order book

high confidence

Total value

₹4,888 Cr

as of 2025-06-30 quantified

11.7% QoQ

Inflow this quarter

₹1,529 Cr

Execution

Rs. 722 crore slated for execution in Q2, balance Rs. 4166 crore for FY26 and beyond.

The order book provides solid revenue visibility and supports the company's growth trajectory for the year.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Net ₹1,300 Cr · 2.3× EBITDA
    • Rate reset Finance cost decreased from Rs. 65 crore to Rs. 50 crore QonQ, with expectations of 5-6% further reduction.
    In line with our expectations, net debt stands at Rs.1300 crore with debt-to-equity ratio of 0.64x and net debt to EBITDA at 2.3x. We are focused on bringing this below 2x going forward.

Guidance & targets

Debt

  • Net Debt to EBITDA Ratio Debt · Going forward · High confidence Below 2x
    net debt to EBITDA at 2.3x. We are focused on bringing this below 2x going forward.

    — Ajay Jhanjhari

Profitability

  • Optical Business EBITDA Margin Profitability · Coming quarters (at ~70% utilization) · High confidence 18-20%
    One part we have guided in the past is that as we move this back towards around 70% utilization, we are confident of getting to that 18-20% EBITDA margin, and we have demonstrated that in the past about 2-3 years ago.

    — Ankit Agarwal

Cost

  • Employee Cost as % of Sales Cost · Annually · High confidence 10-12%
    See, our target is, if I can talk about the range, it would be between 10-12% on a yearly basis. That is what we are targeting as of now.

    — Ajay Jhanjhari

  • Finance Cost Reduction Cost · Going forward · Medium confidence 5-6% reduction
    if I talk about a range, we will reduce it by maybe 5-6% more going forward.

    — Ajay Jhanjhari

Sustainability

  • Net Zero Emission Sustainability · By 2030 · High confidence Net zero emission
    We are proud to be MSCI, ESG rated A and committed to achieving net zero emission by 2030.

    — Ankit Agarwal

Corporate Action

  • STL Networks Listing Corporate Action · End of August · High confidence Listing completed
    We expect this listing by the end of August.

    — Ajay Jhanjhari

What to watch in Q2 FY26

Net Debt to EBITDA Ratio

Going forward
Current 2.3x
Target Below 2x

Why it matters

Management has set a clear target to reduce this key leverage metric, indicating focus on financial health.

net debt to EBITDA at 2.3x. We are focused on bringing this below 2x going forward.

Risks & concerns

  • Tariff Impacts between US and India

    medium

    Potential tariff impacts between US and India, though STL's US factory and customer absorption are mitigating factors.

    also with any potential tariff impacts that may happen between US and India again, we are very well set up with our factory in the US... Tariff on India supply to US, I continue to believe, as Ajay just shared up to a certain level, we definitely think should be absorbed by the US customers and possibly some margin we would have to absorb.

    Management acknowledged

  • Increased Employee Cost

    medium

    Employee cost increased QonQ from ₹142 crores to ₹156 crores, representing 14% of sales, above the annual target of 10-12%.

    Yes, so you are right Saket, this increase reflects our investment in building strong leadership across high growth areas like data center and international markets... See, our target is, if I can talk about the range, it would be between 10-12% on a yearly basis.

    Analyst acknowledged

  • China Pricing Battles

    low

    While STL is not directly exposed to China's pricing battles, there are important global signals here.

    While STL is not directly exposed to China's pricing battles, there are important global signals here.

    Management acknowledged

Q&A highlights

6 direct
Finance Cost Reduction Outlook Direct
Going forward, we will generate cash consistently, and that will help us in reduction in interest costs. Along with that, the global reduction in interest cost will also help us. So, if I talk about a range, we will reduce it by maybe 5-6% more going forward. But that will take time, and that will depend on the cash generation to which we are committed.

Provides specific guidance on the expected reduction in finance costs and links it to the company's cash generation capabilities.

Asked by Saket Kapoor

Market Pricing and Realization Trends Direct
it is fair to say that broadly, the market prices have stabilized they have bottomed out... As we said our focus market for growth is particularly in Europe as well as in the US and so to that extent, we continue to see the prices to be stable. As the market improves, particularly in the US, we may see some small improvement in realization in that market in the coming quarters.

Confirms market stabilization after a period of decline and indicates potential for improved realizations in key growth markets like the US.

Asked by Saket Kapoor

US Facility Utilization and Overall Asset Utilization Partial
for competitive reasons, I would not specifically comment on our utilizations overall, but to your point on the US factory, it is really a state-of-the-art factory we built... In terms of utilization of that factory that is improving quarter on quarter and certainly will continue to improve through the course of this year.

Highlights improving utilization in the strategic US manufacturing facility, which is crucial for serving the North American market, though specific numbers were withheld for competitive reasons.

Asked by Saket Kapoor

Reasons for Sharp Increase in Order Intake Direct
It is multiple factors. Obviously, the demand is strong from a timing perspective, so that we were able to lock in some long-term contract with some of our customers, as you can appreciate, certainly with tier I telecom operators and other customers. These contracts take long to mature, and from our perspective, it is for our long-term benefit of the company it is important for us to continue to secure such long-term contracts, and our intent is to continue to do this, both for cable and connectivity going forward.

Explains the significant jump in order intake as a result of strong demand and successful securing of long-term contracts with key customers, providing future revenue visibility.

Asked by Nikhil Chaudhary

Multi-Core Fiber Commercialization Roadmap Partial
We are very early in the market here. There is strong interest from hyperscalers and other telecom operators, but the commercialization will take some time. We are working on this actively, and we have received strong interest from various potential customers.

Provides an update on a key innovation (multi-core fiber) and its potential, while clarifying that commercialization is still in early stages despite strong customer interest.

Asked by Balasubramanian

Data Center Business Growth and Portfolio Update Direct
Look at a macro level, it is still early stage. We have just launched our portfolio and at this stage want to clarify the number that we have shared is a combination of data center plus enterprise which includes our entire copper and copper connectivity portfolio... give us a quarter or two, and we will give you a better update on this.

Clarifies the current scope of reported data center revenue and sets an expectation for more detailed updates on this strategic growth area in the near future.

Asked by Balasubramanian

Capacity Utilization Target for EBITDA Margin Direct
One part we have guided in the past is that as we move this back towards around 70% utilization, we are confident of getting to that 18-20% EBITDA margin, and we have demonstrated that in the past about 2-3 years ago. So that is really where our first focus is, to continue to drive that while we keep the cost structure and everything else in the right level.

Reiterates the company's long-term profitability target for the optical business, linking it directly to achieving higher capacity utilization levels.

Asked by Sunil Jain

Employee Cost as Percentage of Sales Direct
See, our target is, if I can talk about the range, it would be between 10-12% on a yearly basis. That is what we are targeting as of now.

Addresses a specific analyst concern about the quarter-on-quarter increase in employee costs and provides a clear annual target for this metric.

Asked by Saket Kapoor

3 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Performance and Market Recovery

Sterlite Technologies Limited reported a robust Q1 FY26 with consolidated revenue reaching ₹1019 crore, marking a 17% year-on-year growth. The company achieved a PAT of ₹10 crore from continued operations, a significant turnaround from a loss of ₹48 crore in the prior year's quarter. This performance was supported by a healthy EBITDA of ₹140 crore, translating to a 13.7% margin, reflecting improved operational efficiency and cost optimization efforts.

Record Order Intake and Growing Order Book

The company demonstrated strong market traction with an order intake of ₹1529 crore in Q1 FY26, nearly tripling from ₹566 crore in Q1 FY25. This surge was attributed to securing long-term contracts, including a three-year agreement with a leading European telecom player and strong inflows from North American operators. The open order book expanded to ₹4888 crore as of Q1 FY26, up from ₹4378 crore in Q4 FY25, providing solid revenue visibility with ₹722 crore slated for execution in Q2 FY26 and the balance for FY26 and beyond.

Strategic Focus on Data Centers and Next-Gen Fiber

STL is actively expanding its product portfolio for data centers, recognizing the rising demand driven by AI-enabled data centers, which require 36 times more fiber than traditional CPU-based facilities. The company launched STS, a new data center portfolio, and India's first multi-core fiber, offering 4-7x capacity and lower deployment costs, ideally suited for AI data centers and 5G networks. While the data center business is in early stages, management expects to provide a better update on its progress in the next one to two quarters.

Market Share Gains and Geographic Diversification

STL improved its market share in the global Optical Fiber Cable (OFC) market (excluding China) to 7% in Q1 FY26, up from 6% in Q1 FY25. The company's revenue mix remains well-diversified, with Europe contributing 49% and the Americas 31% to the total. Management noted that market prices have stabilized and bottomed out, particularly in focus markets like Europe and the US, with potential for small improvements in realization in the US in coming quarters.

Debt Reduction and Demerger Progress

The company's net debt stood at ₹1300 crore, with a net debt to EBITDA ratio of 2.3x, and management aims to bring this below 2x going forward. Finance costs decreased from ₹65 crore to ₹50 crore quarter-on-quarter, with expectations of a further 5-6% reduction. On the corporate restructuring front, STL Networks Limited, a separate legal entity since March 31, 2025, is expected to be listed by the end of August, pending necessary regulatory approvals.

Sustainability and Innovation Initiatives

STL reiterated its commitment to sustainability, being MSCI ESG rated A and targeting net-zero emissions by 2030. The company is pioneering green hydrogen pilots for optical fiber manufacturing and is the world's first optical fiber manufacturer certified for zero liquid discharge and zero waste landfill. Innovation remains a core strength, with 76 new patents filed last year, bringing the total to 740, and ongoing work on future-ready capabilities like hollow-core fiber and AI-powered fiber sensing.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Telecommunication earnings calls