Sterlite Technologies Limited · NSE:STLTECH
Sterlite Technologies — Investor Presentation (August 2023)
39 slides from Sterlite Technologies's investor presentation, August 2023
Slide 1: Investor Presentation Aug'23
stl.tech Investor Presentation Aug‘23
Slide 2: Safe Harbour
Safe Harbour Certain words and statements in this communication concerning Sterlite Technologies Limited (“the Company”) and its prospects, and other statements relating to the Company’s expected financial position, business strategy, the future development of the Company’s operations and the genera
Slide 3: Company Overview
Company Overview 1 2 3 4 Company Optical Global STL STL Annexure Overview Networking Services Digital financials © 2022-2023 Sterlite Technologies Limited 3
Slide 4: A leading Optical and Digital Solutions Company
Core A leading Optical and Digital Business Solutions Company Customer Cloud Citizen Large Segments Telcos Companies Networks Enterprises Business Optical Global STL Units Networking Services Digital Business Business Business • Glass Preform • Network Modernisation • Cloud & Cyber Security • Optica
Slide 5: Committed to Net-Zero Emissions by 2030
Committed to Net-Zero Emissions by 2030 ENVIRONMENTALLY SOCIALLY GOVERNED SUSTAINABLE RESPONSIBLE WITH CARE Zero Waste to Landfill Certified1 Committed to the UN SDGs2 Strong Internal Governance Zero Liquid Discharge Certified 16 Two of the Big Four 225,000+ MT Aligned with 15 of the 17 SDGs as stat
Slide 6: Strategic priorities for FY24: Grow, Consolidate, Build
Strategic priorities for FY24 01 02 Consolidate 03 Build Grow Optical Networking Global Services STL Digital • Increase OFC market share • Build capability for value added • Consciously invest in and Optical Connectivity services building technology and attach rate • Achieve profitability in the UK
Slide 7: Optical Networking Business
Optical Networking Business 1 2 3 4 Company Optical Global STL STL Annexure Overview Networking Services Digital financials © 2023-2023 Sterlite Technologies Limited 7
Slide 8: Industry Outlook - 5G & FTTH deployments continue
Industry Outlook - 5G & FTTH deployments continue 5G FTTH • 532 operators have invested in 5G as of June’23 • No. of new home passes in the US likely to remain the same in 2023 as compared to 2022 • 254 operators have already launched commercial 5G services. • In the UK, 4.7 mn. new home passes expe
Slide 9: OFC Demand: Short term headwinds, Medium term outlook healthy
OFC Demand : Short term headwinds, Medium term outlook remains healthy OFC Demand region wise ( Mn. Fkm) 621 638 600 570 535 545 125 135 114 Focus CAGR 90 99 91 Regions 2023-27 78 81 85 71 74 69 22 24 25 North 18 18 21 11% 48 50 51 53 America 46 47 50 52 55 57 59 48 Europe 5% 264 269 276 282 283 282
Slide 10: US Demand outlook remains positive; China Mobile tender awarded
US Demand outlook remains positive China Mobile tender awarded US China • Biden administration announced the distribution of • China Mobile tender awarded for 108 mn. fkm. funding under $42.5 bn. BEAD Program • Average cable price in RMB remains unchanged vs • Funding to be primarily used to deploy
Slide 11: STL has fully vertically integrated world class manufacturing
STL has fully vertically integrated world class manufacturing Optical Fibre (OF) Optical Fibre Cable (OFC) + Specialty Cable (SCB) Optical Connectivity 2 Shendra, Waluj, Jiangsu Sterlite Rakholi, Silvassa Metallurgica Sterlite Conduspar South Carolina, Dadra & Nagar Optotec Aurangabad, India Auranga
Slide 12: STL has Industry leading products with global customer base
STL has Industry leading products with global customer base Key Products Key customers Advanced Optical Purpose engineered Fibre Optical Fibre Cables 8+ 2-8 Recent Wins (Ex: Bend insensitive, Multicore) (Ex: IBR, Armored, Micromodule) Years of relationship Years of relationship Q2 FY23 State telecom
Slide 13: STL OFC market share and connectivity attach rate is stable
STL OFC market share and connectivity attach rate is stable Global (ex-China) OFC Optical Connectivity Optical Business Market share Attach rate Growth levers 11% 11% 10% 10% Customer Grow optical commitments connectivity to build new capacity & Data centre portfolio Sweat Long assets Medium Term H1
Slide 14: In Q1 FY24, Optical Business EBITDA margins stable at 20%+
In Q1 FY24, Optical Business EBITDA margins stable at 20%+ Revenue* (INR Cr.) 1,486 1,505 -2% 1,313 1,137 1,112 Q1 FY24 Revenue at INR 1,112 Cr. • OFC volume lower on QoQ basis • OFC realisation lower on QoQ basis due Q2FY23 Q3FY23 Q4FY23 Q1FY23 Q1FY24 to change in geographical revenue mix EBITDA* (
Slide 15: Actions to grow revenue and maintain operating profitability
Actions to grow revenue and maintain operating profitability • Increase share in EMEA, India and APAC markets to fill the volume gap from US market • Drive new product development, approval and commercialization in Optical Connectivity • Engaged a tier-1 management consulting firm to optimise operat
Slide 16: Global Services Business
Global Services Business 1 2 3 4 Company Optical Global STL STL Annexure Overview Networking Services Digital financials © 2023-2023 Sterlite Technologies Limited 16
Slide 17: Industry Outlook - 5G in India; BharatNet investment
Industry Outlook - 5G deployments in India have picked up pace; Govt. to invest Rs. 1.39 lakh Cr. for last mile BharatNet connectivity 5G deployments in full speed • Airtel and Jio Plan to cover India by end of 2023 or early 2024 • Telcos are expected to deploy approx. 200,000 cable kms. across Nati
Slide 18: Large scale project execution capability in India and UK
STL has a large scale project execution capability in India and UK India - Public India - Private Network Modernization • NETWORK MODERNISATION Indian Defense LONG HAUL FIBRE NETWORK Connecting ~27K Network elements, for India’s leading telco – 14,500+ kms deployed Design, integrate & deploy end to
Slide 19: Project execution is on track
Project execution is on track India - Public India - Private UK Transformative Modern Optical Gigabit Rural digital inclusion Network Networks Fibre roll out Fibre roll out FTTH , UK Telangana 65% Completed (Large Indian telco) 31% All Projects Completed Phase - 3 20% Completed Bharatnet Project Net
Slide 20: Won new projects in Q1 FY24
Won new projects in Q1 FY24 • Public sector customer : System Integrator for supply and setting up ICT Infrastructure for Data centers and remote sites along with O&M • Private sector customer : Fibre roll out for 5G deployment Bharat Net Phase 3 tenders expected by H2FY24 © 2022-2023 Sterlite Techn
Slide 21: Continue to improve profitability in Global Services
Continue to improve profitability in Global Services Revenue* (INR Cr.) -4% 411 381 367 353 352 Q1 FY24 Revenue at INR 353 Cr. • Selective order intake & execution Q2FY23 Q3FY23 Q4FY23 Q1FY23 Q1FY24 EBITDA* (INR Cr.) Q1 FY24 EBITDA at INR 28 Cr. +27% EBITDA % • Favourable project mix 28 23 14 6 5 6.
Slide 22: Proposed scheme to demerge Global Services business
Proposed scheme to demerge Global Services business Current Structure Proposed Structure Shareholding as on March 31st,2023 Public Promoter Public Promoter Public Promoter Shareholders Group Shareholders Group Shareholders Group 45.95% 54.05% 45.95% 54.05% 45.95% 54.05% STL STL STL Networks Ltd. Opt
Slide 23: Rationale for Demerger
Rationale for Demerger SIMPLIFIED BUSINESS Pursue growth opportunities without capital constraint STRUCTURE Business CLEAR & WELL DEFINED Exceed customer expectations through closer collaboration POSITIONING Customers STRONG EMPLOYEE Create more opportunities for the existing & new talent Employees
Slide 24: STL Digital Business
STL Digital Business 1 2 3 4 Company Optical Global STL STL Annexure Overview Networking Services Digital financials © 2023-2023 Sterlite Technologies Limited 24
Slide 25: Business Snapshot
Business Snapshot Identity Service Offerings Industry Vertical • Cloud & Cyber Security • Technology 1 • Life Sciences, Healthcare & • Data Analytics & AI 950+ • Delivery Centre in • Enterprise SaaS Services Manufacturing • Communication, Media & Services Bangalore • Product Engineering Consultants
Slide 26: Strong growth in STL Digital on QoQ basis
Strong growth in STL Digital on QoQ basis Revenue* (INR Cr.) 62 35 26 Q1 FY24 Revenue up at INR 62 Cr. 6 • Strong QoQ growth 3 Q2FY23 Q3FY23 Q4FY23 Q1FY23 Q1FY24 • No of consultants up at 950+ Q1 FY24 EBITDA loss at INR 37 Cr. EBITDA*(INR Cr.) Q2FY23 Q3FY23 Q4FY23 Q1FY23 Q1FY24 • Expect losses to re
Slide 27: STL Financials
STL Financials 1 2 3 4 Company Optical Global STL STL Annexure Overview Networking Services Digital Financials 27
Slide 28: Q1 FY24 Revenue, EBITDA and PAT up by 2%, 42% and 156% YoY
Q1 FY24 Revenue, EBITDA and PAT up by 2%, 42% and 156% YoY 1,883 1,872 +2% 280 +42% 1,684 251 1,522 234 235 1,487 165 13.9 13.3 15.0 15.4 11.1 Q2FY23 Q3FY23 Q4FY23 Q1FY23 Q1FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY23 Q1FY24 Revenue* (INR Cr.) EBITDA % EBITDA* (INR Cr.) 82 77 Revenue up by 2% YoY 66 +156% 46 •
Slide 29: Revenue mix has moved towards EMEA and India
Revenue mix has moved towards EMEA and India Customer Segments Geographical Distribution Key Order Wins Revenues* (INR Cr.) Revenues* (INR Cr.) Q1 FY24 6,925 1,522 6,925 1,522 • Multi million-dollar orders from a 4% 6% 2% 1% 5% 0.1% 3% 0.1% European telecom player for 25% 30% optical fibre cable • M
Slide 30: Order Inflow is stable
Order Inflow is stable 10,938 7,035 10,512 Open Order 3,903 Order Book Book (INR Cr.) Spread (INR Cr.) Q1FY23 Q1FY24 Bal. 9M FY24 FY25 and beyond Cloud Open Order Book Digital & Technology Open Order Enterprises 4% Customer wise 8% Book BU wise 16% Global Services - Capex 21% 48% Optical Networking
Slide 31: Consolidated Financials: Abridged Version
Consolidated Financials: Abridged Version P&L (INR Cr.) Q4 FY23 Q1 FY23 Q1 FY24 YoY Revenue* 1,872 1,487 1,522 2% EBITDA* 280 165 235 42% Key Updates EBITDA % 15.0% 11.1% 15.4% Depreciation 78 76 81 EBIT* 202 89 154 • Net Debt is stable on QoQ basis Interest 89 68 92 • Company has filed the PBT* 113
Slide 32: Committed to financial priorities for FY24
Committed to financial priorities for FY24 Revenue 7 - 9 % for full year Growth Rate Net Move to less than 2.5x Debt/EBITDA 32
Slide 33: Summary
Summary Grow Optical business: Increase share in the EMEA, India and APAC markets to fill the volume gap from the US market. Optimise operating costs to maintain operating profitability Consolidation towards strategic segments in Global services: Focus on select projects to improve profitability and
Slide 34: Annexure
Annexure 1 2 3 4 Company Optical Global STL STL Annexure Overview Networking Services Digital Financials © 2023-2023 Sterlite Technologies Limited 34
Slide 35: With a strong board in place
With a strong board in place © 2022-2023 Sterlite Technologies Limited 35
Slide 36: Key Management
Key Management Pravin Agarwal Ankit Agarwal Vice Chairman & Whole time Director Managing Director & Whole time Director Paul Atkinson Praveen Cherian Raman Venkatraman CEO, Optical Network Business CEO, STL Digital CEO, Global Services Business Tushar Shroff Amit Deshpande Chief Financial Officer Co
Slide 37: Corporate structure and shareholding pattern
Corporate structure and shareholding pattern Corporate structure Shareholding pattern As on June 30th, 2023 As on June 30th, 2023 Public Promoters & Shareholders Promoter Group 45.95% 54.05% 36.80% Non Institutional Holding z 54.05% Promoters and Promoter Group* 9.16% Institutional Holding Metallurg
Slide 38: STL in Numbers
STL in Numbers INR 1,522 Cr. Q1 FY24 Revenue Americas (29%), SOFTWARE Europe (40%), India (30%), RoW(1%) DEVELOPMENT CENTRES MANUFACTURING Customers in UNITS 100+ countries SALES OFFICES 10 GLOBAL FOOTPRINT Global production facilities 4 Innovation Centres 650* Zero CMMI Level 5 Global Services PATE
Slide 39: beyond tomorrow
beyond tomorrow © 2022-2023 Sterlite Technologies Limited
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