Sterlite Technologies - Recovery Begins: ICICI Direct

ICICI Direct Report

Sterlite Technologies Ltd. has stated that optical fibre cable capacity utilisations are at 88% (based on capacity of ~37 million square metres).

The company market share (excluding China) grew to ~11% in H1 FY23 versus ~9% in FY22, led by sharp increase in OFC market share in Americas, where it enjoyed ~14% market share in H1 FY23 versus ~7% in FY22.

Sterlite Tech has also maintained that, going ahead, growth should be driven by growing OFC volumes (increasing market share, increasing optical interconnect attach rate and developing new products) and consolidate the services business (focus on profitable growth and reduce working capital).

We highlight that this is a complete shift from earlier stance of expanding services business, which has had stretched working capital cycle history.

We bake in revenues compound annual growth rate of ~21.4% in FY22-24E.

We expect H2 FY22 revenues to remain healthy driven by continued robust capacity utilisation in the product segment as well as improved traction in services business.

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