Domestic brokerage firm Nirmal Bang Institutional Equities has initiated coverage on Sterlite Technologies Ltd (STL) with a 'Buy' rating, setting a target price of Rs 1,340. This projection implies a potential 40% upside for the multibagger stock, which has already seen an astounding 1,050% surge in the last nine months alone.
On Monday, shares of Sterlite Tech climbed another 3.7%, reaching Rs 989.70 and pushing its market capitalization to the Rs 51,000 crore mark. The stock has demonstrated significant momentum, soaring 1,070% from its 52-week low of Rs 84.65 recorded on January 27 this year.
Key Drivers for Future Growth
Nirmal Bang attributes its optimistic outlook to several factors, including stronger demand, a significant recovery in earnings, and an increasing share of higher-margin connectivity products. Sterlite Tech operates as an integrated optical connectivity company, with optical networking products contributing approximately 95% of its total revenue.
The company manufactures optical fibre, optical fibre cables, and various connectivity products, establishing its presence across the entire value chain from glass to data centers. STL holds about 9% of the global Optical Fibre Cable (OFC) market outside China, positioning it strategically for global expansion.
Market Trends Fueling Demand
- AI and Data Center Expansion: The brokerage anticipates substantial growth driven by the global expansion of artificial intelligence infrastructure and data centers. Global data center capacity is projected to more than double from approximately 102 GW in 2026 to 220 GW by 2030.
- Government-Led Broadband Programs: Various government initiatives aimed at expanding broadband access are expected to boost demand for optical connectivity.
- 5G and 6G Roll-outs: The ongoing deployment of 5G networks and future 6G technologies will necessitate extensive optical fibre infrastructure.
Ex-China optical fibre demand is forecast to grow at an impressive 12% CAGR through 2030, further supporting STL's growth trajectory.
Financial Performance and Projections
The stronger demand environment has already translated into improved financial performance for STL. The company moved from a loss of Rs 123 crore in FY25 to a profit of Rs 56 crore in FY26. Furthermore, its Q1 FY27 profit stood at a robust Rs 196 crore.
Nirmal Bang projects STL's revenue to rise by 103% to Rs 9,625.6 crore in FY27, further escalating to Rs 16,828.8 crore by FY29. OFC volumes are expected to increase from 32 million fibre-km in FY26 to 68 million fibre-km by FY29. The brokerage also forecasts an expansion in EBITDA margin from 12.3% in FY26 to 23% in FY27, with gross margin improving to 52% from 49.7%.
North America: A Key Growth Region
North America is emerging as a significant earnings driver for STL, with the region's share in revenue increasing from 39% in FY26 to 54% in Q1 FY27. STL's South Carolina facility, its strong relationships with tier-1 operators and hyperscalers, and its non-China supply chain are expected to position it favorably as US customers diversify their sourcing. Tariffs exceeding 100% on China-origin fibre-optic cables are also noted as a factor supporting this shift.
Nirmal Bang's FY29 estimates factor in potential moderations in optical-fibre pricing, a slower data-center and connectivity ramp-up, and execution risks related to capacity expansion, yet still suggest substantial upside for Sterlite Technologies.