Sterlite Technologies has emerged as a beneficiary of rising artificial intelligence-led data centre spending, as hyperscalers expand fibre infrastructure to support higher computing workloads. The company's stock has risen nearly fivefold over the past year, with around 2.8 times of those gains coming in 2026 so far.
The surge in AI workloads is driving demand for optical connectivity, particularly in data centres where bandwidth requirements are moving from 400G to 800G and up to 1.6 terabits per second. At those levels, copper-based interconnections face physical limitations, making optical fibre necessary for large-scale AI infrastructure.
Data centres are expected to become the fastest-growing driver of global optical fibre demand, with nearly 70% of data centre-related demand projected to be AI-led by 2030. North America remains the centre of this expansion, supported by an estimated $762 billion in hyperscaler capital expenditure in 2026. That spending is expected to increase optical cable demand by 40% next year.
The broader fibre expansion cycle, including fibre-to-the-home and 5G rollouts, is also supporting demand for optical products globally.
Global Positioning
STL holds an 8% share of the global optical fibre cable market excluding China and has built an intellectual property portfolio of more than 780 patents. The company has shifted from being a traditional cable manufacturer to a fully integrated optical connectivity provider targeting AI and cloud infrastructure markets.
The company said it is supplying and co-developing optical solutions with hyperscalers including Google, Microsoft and Amazon Web Services. STL aims to increase the share of higher-value connectivity products through those partnerships.
Its "Glass to Gigabit" model allows STL to manage the manufacturing chain internally, helping the company control costs, maintain product quality and develop customised solutions with telecom and cloud operators.
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North America Focus
North America has become STL's fastest-growing market. CRU estimates optical demand in the region will grow at a compound annual growth rate of 15% through 2030. Installed data centre capacity is projected to rise from 60 gigawatts in 2025 to about 115 gigawatts by 2030.
The region's contribution to STL revenue increased to 39% in FY26 from 25% in FY25. STL is also expanding its data centre product portfolio, including multi-core fibre products that provide four to seven times higher data capacity within the same footprint.
The company recently launched "Neuralis", a connectivity portfolio designed for data centres and GPU clusters. STL said the offering includes ultra-high-density cabling products aimed at improving deployment efficiency.
Margin Targets
STL plans to increase the contribution from its enterprise and data centre businesses to 30% of revenue in FY27 from 19% in FY26. The company is targeting margins of 20% by the fourth quarter of FY27, compared with 13.2% in FY26.
In India, STL supplies products to groups including Adani Group, Reliance Industries and Tata Consultancy Services, which are investing in large data centre projects.
The company also launched India's first Hollow Core Fiber cable, which it said reduces network latency by 30% to 47%.
Broadband Expansion
STL is also positioned to benefit from global broadband expansion projects. Optical fibre demand linked to fibre-to-the-x deployments is projected to rise from 151 million fibre kilometres in 2025 to 170 million fibre kilometres by 2030.
The US government has retained nearly $97 billion in broadband funding, including the $42.5 billion Broadband Equity, Access, and Deployment programme. All 56 US states have submitted proposals under the programme, with fibre connectivity planned for around 63% of eligible locations.
To support that demand, STL expanded its manufacturing and supply chain presence through its South Carolina facility. The company said the localisation strategy could help it participate directly in federally funded broadband projects and deepen relationships with US hyperscalers.
In the UK, Project Gigabit is expected to support fibre demand. BT Group recently increased its full-fibre build target by 20%, aiming to connect up to 5 million premises in FY26.
Europe contributed 39% of STL's FY26 revenue, while the rest of the world accounted for 22%, giving the company exposure across multiple fibre infrastructure cycles.
Financial Turnaround
STL reported revenue of Rs 4,745 crore in FY26, up 19% from a year earlier. Ebitda rose 39% to Rs 628 crore, while margins expanded to 13.2%.
The company reported a net profit of Rs 56 crore in FY26, compared with a net loss of Rs 123 crore in FY25. STL said scale benefits, operational efficiencies and an improved product mix supported the turnaround. Lower US import tariffs, reduced to 15% from 50%, also helped margins.
As of March 31, 2026, STL's order book stood at Rs 7,309 crore, up 67% year-on-year. Of that, Rs 1,468 crore is scheduled for execution in the first quarter of FY27, while the remaining Rs 5,841 crore will be executed from the second quarter onward.
The company is also targeting a net debt-to-Ebitda ratio below 1.2x in FY27, compared with 1.3x in FY26.
Valuation Concerns
Despite the operational recovery, STL's valuation has risen sharply after the stock rally. The company is trading at an enterprise value-to-Ebitda multiple of 33 times, above its 10-year median of 11 times. Historically, the stock has traded at or below 20 times EV/Ebitda.
The company also faces industry and legal risks. STL remains dependent on telecom and hyperscaler capital expenditure, and any slowdown in AI data centre investments could affect growth.
Geopolitical tensions have also increased volatility in helium and polymer prices, creating potential cost pressures.
Separately, STL is appealing against a $96.5 million, or about Rs 920 crore, jury verdict linked to an intellectual property lawsuit filed by Prysmian Cables and Systems USA against its US subsidiary.
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