Sterlite Technologies posts record Q2 revenue and EBITDA as AI connectivity demand lifts order book

Sterlite Technologies Ltd. reported its highest-ever quarterly revenue and EBITDA in the September quarter of FY27, supported by stronger demand for optical connectivity from hyperscalers and telecom operators.

Revenue from continuing operations rose 145 per cent year-on-year to Rs 2,529 crore in Q2 FY27, while reported EBITDA increased by about 500 per cent to Rs 846 crore. Net profit stood at Rs 517 crore, against Rs 4 crore a year earlier. Revenue was also up 32 per cent sequentially from Rs 1,910 crore in Q1 FY27.

Reported EBITDA margin improved to 33.5 per cent from 13.6 per cent a year earlier and 20.8 per cent in the preceding quarter. However, the quarterly figure included a net gain of around Rs 161 crore arising from import tariff refunds received by the company’s US subsidiaries. Excluding this one-time gain, operational EBITDA was Rs 685 crore and the operational margin was 27.1 per cent, still 624 basis points higher sequentially.

The tariff refunds were received by Sterlite Technologies Inc. and Sterlite Optical Connectivity NA LLC from US Customs and Border Protection for certain goods imported under the International Emergency Economic Powers Act. STL said the reversal of tariffs previously expensed, along with the related obligation, increased quarterly profit before Tax by a net Rs 161 crore.

The core optical networking business accounted for nearly all of the improvement. Segment revenue climbed to Rs 2,461 crore from Rs 980 crore in Q2 FY26, while segment EBITDA rose to Rs 851 crore from Rs 136 crore. Digital and technology solutions reported revenue of Rs 86 crore and EBITDA of Rs 2 crore.

Order visibility also strengthened sharply. STL’s open Order Book reached a record Rs 35,274 crore at the end of the quarter, compared with Rs 7,687 crore at the end of FY26. Of the current backlog, Rs 3,021 crore is scheduled for Q3 FY27, while Rs 32,253 crore is due for Q4 FY27 and beyond.

The company has secured several multi-year supply arrangements with hyperscalers, including a USD 1.2 billion agreement for optical connectivity products through CY30. Management said AI-ready data centres require substantially greater fibre density and that the optical connectivity attach rate reached an all-time high of 24 per cent in H1 FY27.

For H1 FY27, revenue from continuing operations more than doubled to Rs 4,439 crore, compared with Rs 2,054 crore a year earlier. STL also reported a net debt-free position and net cash of Rs 703 crore, though this included around Rs 396 crore of restricted cash related to a legal matter involving its US entity.

‘Q2 FY27 is our best quarter yet, with the highest revenue and EBITDA in STL’s history,’ said Ankit Agarwal, Managing Director of STL. He said the large multi-year agreements and record order book provided visibility as hyperscalers and telecom operators expand digital infrastructure.

What This Means for Investors

Q2 FY27 provides stronger evidence that STL’s effort to shift towards higher-value optical connectivity for AI data centres is translating into revenue growth and better operating leverage. The Rs 35,274 crore order book is particularly consequential because it is more than seven times STL’s FY26 revenue of Rs 4,745 crore, although its conversion will extend across several years. The operational EBITDA margin of 27.1 per cent is more important than the reported 33.5 per cent margin because it excludes the Rs 161 crore tariff refund gain. It indicates that improved product mix, utilisation and demand are contributing materially to profitability.

The announcement is supportive for the investment case because it improves earnings visibility and shows momentum beyond the traditional telecom cycle. Still, the largest part of the backlog is scheduled for Q4 FY27 and later, making timely execution, customer qualification and delivery margins decisive. Investors should also separate recurring operating gains from the one-time US tariff refund and monitor cash conversion, especially as STL plans significant capacity investments and a portion of its reported cash remains restricted.

Disclaimer: The article is for informational purposes only and not investment advice.