Sterlite Technologies Limited

Technology — Communication Equipment · NSE

₹860.00−₹18.45 (−2.10%)

DalalBaazaar Score

33 / 100

🔴 Weak

Verdict

CAUTION

Risk

High

Driven by moderate debt load, short-term liabilities exceed short-term assets, a beta above 1.3, so it swings harder than the index.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:27 pm

Understanding the Business

Company site ↗

The 60-second version of Sterlite Technologies Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sterlite Technologies Limited, together with its subsidiaries, manufactures and sells telecom products in India and internationally. It operates through Optical Networking Business and Digital and Technology Solutions segments.

IndustryCommunication Equipment

SectorTechnology

Employees707

Annual revenue₹4,663 Cr

How does it make money?

Turns over ₹4,663 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 707 employees supports ₹6.60 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹6.60 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 8.0% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE32.0%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 36.4% and earnings to grow about 52.7% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+36.4%

Est. earnings growth+52.7%

Analysts3

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -31% while net margin moved -42% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-31%

Margin effect-42%

DalalBaazaar Score

33/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 11.8% a year
✗ Profit has declined at 26.5% a year

Quality vs. Valuation

Company Quality

34/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

23/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

186.6x

3Y Median

39.1x

40 monthly readings · mean 118.2x · range 17.8x–819.7x

Sector Median

16.5x

median of 4 sector peers

⚠️Current valuation is approximately 377% above its 3y median of 39.1x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 1027% above the peer median of 16.5x.

vs. its own history

Expensive

39.1x median over 40 months · +377%

vs. sector peers

Expensive

16.5x median of 4 peers · +1027%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

76.7x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 49% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 6.7% to 2.5% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 16.8% to 8.0% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 1 high · 4 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.6x — little room if earnings dip.
🟡Profit is decliningFinancial
Net profit is down 60% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 2.0 points over 3 years.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 22% over 3 years — each existing share owns a smaller slice of the company.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.98 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 49% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 14.9% to 12.8%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 3.2x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
The price already assumes success
The stock trades 377% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 6.7% to 2.5%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 11%✓ 12.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.2x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Interest cover stays above 3x✗ 1.6x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹327 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 8.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 3 neutral · 4 weak

Market Cap

₹44,209 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

186.6x

Expensive

Expensive — verify against sector peers

P/B Ratio

18.51x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹4.61

Profitable

Profitable on a per-share basis

ROE

2.5%

Weak

Weak capital efficiency

ROCE

8.0%

Weak

Low return on total capital employed

Debt/Equity

0.86x

Moderate

Moderate leverage

Revenue Growth (YoY)

87.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

1755.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹327 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

26.3x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

15.7%

Good

Healthy core-business profitability

Net Margin

4.3%

Average

Average bottom-line conversion

Current Ratio

0.98

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

1.60

High swing

Swings more than the market in both directions

52W Range Position

80%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

913.3 / 792.6

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

54.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹6,790 Cr	₹4,000 Cr	₹3,909 Cr	₹4,663 Cr	-11.8%
EBITDA	₹1,009 Cr	₹508 Cr	₹423 Cr	₹598 Cr	-16.0%
EBITDA Margin	14.9%	12.7%	10.8%	12.8%	—
PAT (Net Profit)	₹141 Cr	-₹51 Cr	-₹123 Cr	₹56 Cr	-26.5%
EPS	₹3.5	₹-1.28	₹-2.54	₹1.11	-31.8%
ROE	6.7%	-2.5%	-6.2%	2.5%	—
ROCE	16.8%	5.6%	3.1%	8.0%	—
Total Debt	₹3,834 Cr	₹3,376 Cr	₹1,926 Cr	₹1,942 Cr	-20.3%
Free Cash Flow	-₹147 Cr	₹511 Cr	₹211 Cr	₹327 Cr	—

🔴 Revenue has shrunk at 11.8% a year over 3 years.

🔴 EBITDA has shrunk at 16.0% a year over 3 years.

🔴 EBITDA Margin has fallen from 14.9% to 12.8% over 3 years (-2.0 pts).

🔴 PAT (Net Profit) has shrunk at 26.5% a year over 3 years.

🔴 EPS has shrunk at 31.8% a year over 3 years.

🔴 ROE has fallen from 6.7% to 2.5% over 3 years (-4.3 pts).

🔴 ROCE has fallen from 16.8% to 8.0% over 3 years (-8.8 pts).

🟢 Total Debt has shrunk at 20.3% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹147 Cr to ₹327 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹6,346 Cr

Total Liabilities

₹4,078 Cr

Cash & Equivalents

₹298 Cr

Operating Cash Flow

₹520 Cr

Capex

-₹193 Cr

Shareholding (proxy)

Institutional Holding

21.2%

Insider Holding

50.8%

Corporate Actions

Ex-Dividend Date

08 Aug 2023

Analyst Consensus

Recommendations

3 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹1,353.33

+57.4% vs CMP

Target Range

₹1,310 – ₹1,400

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

2 mixed4 general

Sterlite Technologies raises FY27 EBITDA margin guidance to 23%

scanx.trade, 18 Oct

Sterlite Tech shares rally 5% to 52-week high on inkining long-term supply agreement for $1.2 billion; stock soars 826% YTD

Upstox, 01 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Smallcap stocks under pressure; Sterlite, MTAR, HFCL, Netweb slide 5%

Business Standard, 15 Oct

What Sterlite Technologies Holders Got Right Before A 648% Run

Simply Wall Street, 17 Oct

Maithan Alloys Acquires Equity Stake In Sterlite Technologies Through Stock Market

Sahi, 17 Oct

Sterlite Tech shares jump 4% as Nomura initiates coverage forecasting nearly 50% upside in 2026 multibagge

The Economic Times, 06 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Valuation · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 1 high-severity red flag sits above this conclusion and should be read first.

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑