CLSA sees 46% upside in this AI data centre play on Rs 18,600 cr order book

CLSA’s case rests on a sharp rise in the order book, a growing contribution from data centres and a large AI data-centre order.

Sterlite Tech: The big growth drivers

Sterlite Technologies‘ order book jumped 155% quarter-on-quarter to Rs 18,600 crore in 1QFY27, according to CLSA. The increase was led by a US hyperscaler order, while the company also secured fresh orders from international and domestic telecom customers.

The data-centre business has also become a much larger part of revenue. CLSA said data centres accounted for 21% of revenue in 1QFY27, compared with 1% in FY26. The brokerage expects demand from AI data centres to support the company’s growth over the coming years.

CLSA expects Sterlite Technologies’ revenue and EBITDA to grow at compound annual growth rates of 14% to 21% between FY27 and FY29. The brokerage said there could be further gains if the pace of order wins continues.

CLSA on Sterlite Technologies: ‘Outperform’

CLSA’s report describes Sterlite Technologies as an end-to-end optical manufacturer serving data centres, telecom companies, citizen networks and enterprises. The brokerage said the company has 785 patents and 10 manufacturing facilities worldwide, including one in South Carolina in the US.

Sterlite Technologies’ revenue and EBITDA increased 33% to 97% quarter-on-quarter in 1QFY27, while EBITDA margin expanded to 20%, according to CLSA. The brokerage expects the data-centre business to add to the company’s existing FTTx and 5G operations.

CLSA estimates revenue at Rs 7,996.8 crore in FY27, compared with Rs 4,745 crore in FY26. EBITDA is estimated at Rs 1,644.5 crore in FY27 against Rs 569 crore in FY26, while net profit is estimated at Rs 788.8 crore compared with Rs 56 crore in FY26.

“USA & India datacentres to drive STL’s exponential growth,” CLSA said in its report.

Rs 18,600 crore order book strengthens the growth case

The company’s order book stood at Rs 18,600 crore in 1QFY27, up 155% quarter-on-quarter. CLSA said the increase was led by the US hyperscaler order and expects the order book to continue expanding.

Sterlite Technologies has also secured a $210 million order from a leading international telecom infrastructure company, according to the report. Another order worth Rs 960 crore has come from a domestic telecom operator.

CLSA expects revenue growth of 68.5% in FY27, followed by 15.2% in FY28 and 12.5% in FY29. EBITDA growth is estimated at 189% in FY27, followed by 23.7% in FY28 and 17.8% in FY29.

“Sterlite’s order book soared 155% QoQ in 1QFY27 to Rs186bn and will continue expanding,” CLSA said.

Data centres become Sterlite Technologies’ fastest-growing business

CLSA said Sterlite Technologies has three main growth avenues: FTTx, data centres and 5G networks. Data centres are currently the fastest-growing of the three, with their revenue contribution rising to 21% in 1QFY27 from 1% in FY26.

The brokerage expects North America’s data-centre capacity to increase from 63GW to 126GW by 2030. CLSA said hyperscalers and AI workloads are driving this expansion and increasing the amount of fibre required inside data centres.

India is also expected to see a substantial increase in data-centre capacity. CLSA estimates that India’s capacity could rise from 1.6GW to 10GW by 2030, with commitments from global hyperscalers and Indian companies supporting the increase.

“AI workloads create dense fibre interconnections, increasing fibre per rack alongside every new DC,” CLSA said.

Neuralis expands the AI data-centre opportunity

Sterlite Technologies’ AI data-centre portfolio, Neuralis, has expanded the company’s opportunity in this business, according to CLSA. The brokerage said the portfolio has enabled order wins, including a large contract for an AI data centre of a US hyperscaler.

According to CLSA, the company won a $1.1 billion order for an AI data centre of a US hyperscaler. The brokerage has included this order among the factors supporting its expectations for stronger demand for optical fibre and connectivity solutions.

CLSA also said Sterlite Technologies operates across the value chain, from raw materials to network connectivity. Its manufacturing footprint includes 10 facilities worldwide, while its portfolio includes fibre-to-fibre cable, specialty cables and connectivity solutions.

“Sterlite’s AI DC portfolio ‘Neuralis’ has expanded its DC opportunity with a large US$1.1bn order win,” CLSA said.

CLSA sees strong growth in revenue and profit

CLSA expects Sterlite Technologies’ revenue to reach Rs 9,215.3 crore in FY28 and Rs 10,367.2 crore in FY29, from Rs 7,996.8 crore estimated for FY27. EBITDA is expected to reach Rs 2,034.5 crore in FY28 and Rs 2,396.8 crore in FY29.

The brokerage expects EBITDA margin to improve from 20.6% in FY27 to 22.1% in FY28 and 23.1% in FY29. Net profit is estimated at Rs 982.7 crore in FY28 and Rs 1,207.8 crore in FY29.

CLSA’s valuation uses FY28 earnings per share of Rs 19.1 and a 50-times price-to-earnings multiple to arrive at the target price. The brokerage said the valuation is supported by the improved order book and high earnings visibility.

The balance sheet is also expected to improve. CLSA’s estimates show net debt falling from Rs 163.6 crore in FY26 to Rs 4.47 crore in FY27, before turning into net cash of Rs 438.3 crore in FY28.

“We forecast 14-21% CAGRs in STL revenue/Ebitda over FY27-29CL with upside potential if current order win momentum continues,” CLSA said.

Sterlite Technologies: Key numbers from CLSA report

Source: CLSA report dated August 26, 2026.

Conclusion

CLSA’s case for Sterlite Technologies comes down to three developments: stronger data-centre demand, a much larger order book and improving financial performance.

 The brokerage expects the US and Indian data-centre markets to support fibre demand, while recent orders provide support for its growth estimates. Its positive view is therefore tied to whether the company’s order momentum and data-centre business continue to develop as expected.

Disclaimer: This article is based solely on the CLSA research report dated August 26, 2026. The rating, estimates, valuation and other views mentioned are those of CLSA and are provided for informational purposes only. They should not be treated as investment advice. Investors should independently assess the information and consider their own financial circumstances before making investment decisions. Investments are subject to market risks, and past performance does not guarantee future results.