Fibre Tailwinds, Valuation Headwinds for Sterlite

Sterlite Technologies stands to gain from US action against Chinese data-centre fibre suppliers, but upside for shareholders is tempered by rich valuations and execution risks. The US is considering a ban on certain Chinese data-centre components, adding to existing 35% anti-dumping duties on Chinese optical fibre cables that have eroded China’s price advantage. Sterlite, with about 9% global optical cable market share outside China, is well placed as hyperscale data-centre capacity and AI workloads drive higher fibre intensity. In Q1 FY27, revenue grew 87% YoY to ₹1,910 crore, EBITDA surged 184% to ₹397 crore, and margins hit 20.8%, ahead of the 20% full-year guidance; net profit jumped from ₹10 crore to ₹197 crore and the company turned net debt-free with ₹483 crore net cash. Order book stood at ₹18,618 crore as of 30 June 2026; a fresh US order of about $210 million (nearly ₹2,000 crore) for optical fibre took the total above ₹20,000 crore. Q1 FY27 saw order inflows of ₹13,100 crore, including roughly ₹10,000 crore from a large hyperscaler for FY27–FY29 and around $100 million for its Neuralis data-centre portfolio, giving strong visibility but also raising execution demands. Data-centre revenue is now 21% of the total, up from 1% in FY26, and with enterprise business may reach 50% in FY27, while North America’s share has risen to 54% from 39%, aided by local US manufacturing. Sterlite plans to invest around ₹500 crore annually over the next three years and continues to build IP, but high capital intensity has weighed on returns. For shareholders, the large order book, US demand and better margins offer upside if earnings and cash generation stay robust, potentially normalising valuations as the base grows. Yet much optimism is already priced in, so any policy delay, execution slip or AI data-centre slowdown could quickly hurt both earnings momentum and elevated valuations.