Nirmal Bang's FY29 estimates of ~Rs 16,828.8 crore revenue and 26.0% EBITDA margin remain conservative, factoring in moderation in optical-fibre pricing, a slower-than-guided ramp-up in data-centre mix and connectivity attach rates, and execution risks around capacity expansion, while still capturing the benefits of AI-led demand, higher-value connectivity products, capacity expansion, and operating leverage.
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Nirmal Bang Report
Nirmal Bang has initiated coverage on Sterlite Technologies Ltd. with a Buy recommendation and has set a target price of Rs 1,340, based on ~20 times Sep-28E EBITDA on an SOTP basis, implying a potential upside of 40%, from the reports current market price of Rs 955,
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Sterlite Technologies is an integrated optical connectivity player, with optical networking contributing ~95% of revenue. It manufactures optical fibre, optical fibre cables (OFCs), and connectivity products, with ‘glass-to-data-centre' integration; the company has a ~9% global OFC share outside China.
The brokerage sees a strong structural demand outlook for Sterlite Technologies, led by three key drivers:
- AI and data-centre expansion,
- government-led broadband programmes, and
- fifthgeneration/sixth-generation (5G/6G) roll-outs.
Nirmal Bang also noted that global data-centre capacity is expected to more than double from ~102GW in 2026 to ~220GW by 2030. Together, they are expected to lift ex-China optical fibre demand at a ~12% CAGR through 2030.
Additionally EBITDA margin is also expected to expand from 12.3% in FY26 to 23.0% in FY27E, aided by gross margin improving from 49.7% to 52.0% on a richer product mix, adds the brokerage.
Beyond cables, Stetlite is increasing its wallet share through connectivity products, with a rising attach rate, reflecting the extent of connectivity sold alongside fibre cables, providing an additional growth and margin lever as data-centre deployments scale up.
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