Sterlite Technologies (STL) on Friday reported a consolidated net profit of Rs 50 crore for the December quarter compared to a loss of Rs 138 crore in Q3FY22. STL’s revenue grew by 46% year-on-year to Rs 1,882 crore. The company’s operating profit came in at Rs 97 crore compared to a loss of Rs 142 crore in Q3FY22.
The Ebitda during the quarter was at Rs 252 crore while its Ebitda margin rose to 13%. The company’s board approved on Friday a Rs 500 crore fundraising via rights issue. The promoters and promoter group of the company would be subscribing to the full extent of their aggregate rights entitlement, the firm said.
Ankit Agarwal, managing director, STL, attributed profits to focus on the optical business in the US and European markets and exit from sub-scale and unprofitable businesses. This would be adding around Rs 30-40 crore to the company’s profits every quarter, Agarwal said. The company would be prioritising cash and profit over revenue growth.
STL decided to exit from the telecom software and wireless access products to focus on fibre and network services. STL will not be investing in this and was looking at selling this business to external investors, Agarwal said. They would also focus more on private sector business and reduce exposure to the government business and pick up such business selectively and depending on profitability and payment terms.
The company’s order book was at Rs 12,054 crore with multi-million, multi-year contracts signed with top-tier service providers. Agarwal said their customers continued with their capex and remained committed to planned investments for building fibre and 5G networks and the medium-term capex outlook was positive.
Agarwal wanted STL to be among the top three global companies in the optical space. STL’s fibre manufacturing facility in China and cable facility in the US have begun commercial operations. The addition of these facilities would start reflecting from H1FY24, Agarwal said.
STL was also targeting the growth in the passive accessories and optical interconnect business. For every dollar of cable bought by customers, the attach rate was at 10% (connectors sold for every $ worth of cable). They wanted to take the attachment rate to 40%.
Demand for STL’s products was being driven by growth in the fibre-dense networks across the globe and the 5G rollout in India with the company working with both the leading operators in the country for the 5G rollout. Fiberisation orders in India on the back of 5G rollouts with Indian service providers for their pan-India fibre roll were worth Rs 500 crore. With a sharp focus on cash and profitability, reduction in debt and calibrated exits from sub-scale businesses, Agarwal said STL was poised for long-term growth. Shares of STL fell by 4.2% to Rs 175.35 on the BSE.