- Global Services EBITDA Margin: Improved from 3.1% to 7.6% year on year.
- Digital Services Revenue: More than quadrupled year on year.
- QIP Fund Raise: Successfully completed INR1,000 crore in April '24.
- Net Debt Reduction: Reduced by INR334 crores during FY24.
- Optical Business Q4 Revenue: INR777 crores.
- Optical Business Full-Year Revenue: INR3,830 crores.
- Optical Business Q4 EBITDA: INR60 crores.
- Optical Business Full-Year EBITDA: INR621 crores.
- Optical Business Q4 EBITDA Margin: 7.7%.
- Optical Business Full-Year EBITDA Margin: 16.2%.
- Global Services Q4 Revenue: INR323 crores.
- Global Services Full-Year Revenue: INR1,456 crores.
- Global Services Q4 EBITDA: INR39 crores.
- Global Services Q4 EBITDA Margin: 12.1%.
- Global Services Full-Year EBITDA: INR110 crores.
- Global Services Full-Year EBITDA Margin: 7.6%.
- STL Digital Q4 Revenue: INR78 crores.
- STL Digital Full-Year Revenue: INR298 crores.
- STL Digital Q4 EBITDA Loss: INR17 crores.
- STL Digital Full-Year EBITDA Loss: INR83 crores.
- Consolidated Q4 Revenue: INR1,140 crores.
- Consolidated Full-Year Revenue: INR5,478 crores.
- Consolidated Q4 EBITDA: INR67 crores.
- Consolidated Full-Year EBITDA: INR627 crores.
- Q4 After-Tax Loss: INR83 crores.
- Full-Year After-Tax Loss: INR58 crores.
- Open Order Book: INR10,290 crores at the end of Q4 FY24.
- Order Book Addition: INR2,064 crores during the last quarter.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sterlite Technologies Ltd (BOM:532374, Financial) secured its first large orders in North America, marking significant progress in its optical connectivity business.
- The company improved its EBITDA margins in the global services business from 3.1% to 7.6% year-on-year.
- Sterlite Technologies Ltd (BOM:532374) completed its CapEx cycle with the operationalization of its US facility, positioning it to meet the demand for US-made optic fiber cable products.
- The company successfully completed an INR1,000 crore QIP fund raise in April 2024, onboarding key institutional investors.
- Sterlite Technologies Ltd (BOM:532374) reduced its net debt by INR334 crores during FY24 through effective cash generation and divestment of holdings.
Negative Points
- The company experienced a significant decline in optical fiber cable sales volume, leading to a reduction in revenue for FY24.
- Quarter four FY24 EBITDA stood at INR67 crores, reflecting a challenging quarter with lower absolute EBITDA.
- The optical business faced a decline in revenue due to lower volumes, with Q4 FY24 revenue at INR777 crores and full-year FY24 revenue at INR3,830 crores.
- Sterlite Technologies Ltd (BOM:532374) reported after-tax losses of INR83 crores for Q4 and INR58 crores for the full year FY24.
- The company faced suboptimal factory utilization, with utilization levels at sub-50% during the exit quarter of FY24.
Q & A Highlights
Q: This was a tough year for the industry and for us. Can you discuss the market share loss, especially in North America, and how it compares to your competitors?
A: We expect market normalization in one to two quarters. We have focused on improving our product portfolio and ramping up our US factory. We are confident that our volumes for US sales will improve as the market rebounds. β Ankit Agarwal, Managing Director, Executive Director
Q: Can you provide an update on the BEAD project and its timeline?
A: We expect initial demand in Q3 or Q4 of our financial year, with meaningful demand coming in the next calendar year. We are working closely with customers and ensuring our US factory meets BABA compliance for BEAD requirements. β Ankit Agarwal, Managing Director, Executive Director
Q: Regarding the services business, is it fair to assume that you will focus on improving EBITDA margins while revenue growth takes a back seat?
A: Yes, we are focused on taking on projects with the right margins and cash profiles. We have strong relationships with telecom operators and are selective in our order intake to improve profitability. β Ankit Agarwal, Managing Director, Executive Director
Q: How much impact did volume and realization trends have on the optical networking business this quarter? Are we seeing any improvement in prices?
A: The biggest impact was lower volumes, especially in the US and Europe. Realizations have been steady, but average realization has come down due to the mix. We expect volumes to improve as US demand picks up. β Ankit Agarwal, Managing Director, Executive Director
Q: What kind of products are in the pipeline for optical interconnects, and where do you see improvement over the next two to three years?
A: Increasing our attach rate remains a strategic priority. We are focusing on product development and building the right team and capabilities for global markets. β Ankit Agarwal, Managing Director, Executive Director
Q: How are we seeing the demand for tower fiberization in India, especially with the rollout of 5G?
A: Demand is expected to be steady with healthy growth. Both large operators have ambitious plans for fiber-to-the-home and enterprise, which will drive demand. BharatNet will also contribute to demand in rural India. β Ankit Agarwal, Managing Director, Executive Director
Q: What percentage of capacity utilization is needed to break even in the optical fiber business?
A: We need about 60% to 65% utilization to be back on track in terms of profitability. Currently, we are at sub-50% levels but expect improvement in the coming quarters. β Tushar Shroff, Group Chief Financial Officer
Q: How do you see the prolonged high interest rates and US elections impacting the BEAD project?
A: The BEAD project is bipartisan approved, so we don't see any negative impact from the elections. High interest rates have been positive for us due to our recent fund raise, which will reduce our interest costs. β Ankit Agarwal, Managing Director, Executive Director
Q: Can you provide guidance on growth and margins for FY25?
A: We are not providing specific guidance currently. We need to see regular demand coming in, especially in our focus markets, before providing better guidance. β Ankit Agarwal, Managing Director, Executive Director
Q: How is the IT services business looking for next year in terms of growth and profitability?
A: We are focused on achieving breakeven and then profitable growth. Despite a challenging environment, we aim to balance growth with profitability. β Ankit Agarwal, Managing Director, Executive Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
