Sterlite Technologies Limited · NSE:STLTECH
Sterlite Technologies — Q4 FY23 Earnings Presentation
44 slides from Sterlite Technologies's earnings presentation, May 17, 2023
Slide 1: Earnings Presentation Q4 FY23
stl.tech Earnings Presentation Earnings Call Q4 FY23 17th May 2023
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: Ankit Agarwal, Managing Director
Ankit Agarwal Managing Director A believer in purpose-led organizations, Ankit has been leading STL’s growth journey as it transforms billions of lives by connecting the world. He holds sustainability very close to his heart and is leading the company’s ambitious Net-Zero by 2030 target, from the fr
Slide 4: Delivered on Strategic Priorities in FY23
Delivered on Strategic Priorities in FY23 Delivered Pivot in Entry in multi 1 on Strategic Priorities 2 Progress towards becoming top 3 in Optical 3 Global Services 4 trillion dollar IT Industry 5 Financials continue to improve 6 Corporate Action © 2022-2023 Sterlite Technologies Limited 4
Slide 5: Delivered on outlined strategic priorities in FY23
Delivered on outlined strategic priorities in FY23 Achieved + 46% > 20% 12% Mkt share Profitable growth in YoY Revenue EBITDA Margin gained ~3% global Optical Networking growth from Q2 onwards ex-China market share Crossed US Record Order book Technology Strategic milestones in Added greenfield Won
Slide 6: Increased disclosures with consistent delivery
Increased disclosures with consistent delivery Revised Guidance FY23 Actuals • Revenue Growth : 20% to 25% on full year basis • Revenue Growth : 27% on full year basis • EBITDA : To reach 15% by Q4 FY23 • EBITDA : 15% in Q4 FY23 • Net Debt : < INR 3,200 Cr. by Q4 FY23 • Net Debt : INR 3,121 Cr. as o
Slide 7: Strategic priorities for FY24: Grow, Consolidate, Build
Strategic priorities for FY24 01 02 Consolidate 03 Build Grow Optical Networking Global Services Digital Business • Increase OFC market share • Focus on India private • Consciously invest in and optical connectivity • Build capability for value added building technology and attach rate services capa
Slide 8: On course to become global top 3 in Optical
On course to become global top 3 in Optical Delivered on Progress towards Pivot in Entry in multi Financials Corporate 1 Strategic Priorities 2 becoming top 3 in Optical 3 Global Services 4 trillion dollar IT Industry 5 continue to improve 6 Action © 2023-2023 Sterlite Technologies Limited 8
Slide 9: Private investment growth moderates, public investment remains strong
Private investment growth moderates, public investment remains strong Telcos Data centres Citizen Networks • Global Telco spend in telecom equipment • Data centre capex grew by 15% to $241 • US investing $97 bn. in broadband set to grow 1% in 2023 despite the decline bn. in 2022 through RDOF, BEAD (
Slide 10: 5G & FTTH deployments remain strong, 6G & FTTR will emerge
5G & FTTH deployments remain strong, 6G & FTTR will emerge in the future 2.9 12.2 5G 2.3 FTTH 11.2 8.2 8.7 1.7 7.4 6.6 1.0 0.5 0.2 2020 2021 2022 2023 (P) 2024(P) 2025(P) 2020 2021 2022 2023 (P) 2024(P) 2025(P) Cummulative 5G Subs (Bn.) US Homepass per year (Mn.) • 235 service providers have launche
Slide 11: First commercial 6G network to be available by 2030
First commercial 6G network to be available by 2030 USE CASES CURRENT PROGRESS • Precision Healthcare Digital • 2019 FCC, US opened THz for trials World • Smart Agriculture • 2020 China launched first 6G Satellite • Digital Twins • 2021 South Korea published R&D plan • Cobots & Robot Navigation • 20
Slide 12: Medium term outlook remains healthy
Medium term outlook remains healthy OFC Demand region wise ( Mn Fkm) Regional Commentary 4.4% 607 • In North America, inventory build ups in Q4 2022 may 582 delay growth as some carriers will draw down their 557 534 121 inventories first before new ordering starts again. The 504 108 98 other constra
Slide 13: Continued momentum on global OFC market share and attach rate
Continued momentum on global OFC market share and optical connectivity attach rate Global ex-China OFC Optical connectivity Optical Networking Market share attach rate Growth levers 12% 11% 10% Customer 9% Grow optical commitments connectivity to build new 8% capacity & Data centre 5% portfolio Swea
Slide 14: STL continues to scale capacity utilisation in new facilities
STL continues to scale capacity utilisation in new facilities Optical Fibre Facility, China Optical Fibre Cable Facility, USA Commercial production starts at US OFC facility in Q1 FY24 © 2022-2023 Sterlite Technologies Limited 14
Slide 15: Launched Industry first new products
Launched “Industry first” new products Multiverse Slimmest fibre & cable India’s first multicore fibre for 4x capacity for 5G Developed slimmest fibre and cable with 180 micron networks and Fibre to the x networks optical fibre & 288 fibres packed in 6.5 mm cable R&D investments leading to 650* pate
Slide 16: Strong pipeline of new products in optical connectivity
Strong pipeline of new products in optical connectivity Products Products Existing New Strong new product pipeline 3. for entry in 1. Market Cloud Europe New markets & New customer segments Existing To develop new To increase wallet share by entering products by current accounts investing in R&D H1
Slide 17: Pivot towards private customers in Global Services
Pivot towards private customers in Global Services Delivered on Progress towards Pivot in Entry in multi Financials 1 Strategic Priorities 2 becoming top 3 in Optical 3 Global Services 4 trillion dollar IT Industry 5 continue to improve 6 Corporate Action © 2023-2023 Sterlite Technologies Limited 17
Slide 18: 5G deployments in India have picked up pace
5G deployments in India have picked up pace 5G deployments have picked up pace • Airtel launched 5G services in more than 3000 cities / towns; Plan to cover India by March 2024 • Jio launched 5G services in more than 2300 cities / towns; To cover India by end of 2023 • Indian 5G subs have reached mo
Slide 19: Pivot towards better margin projects with low net fund involvement
Pivot towards better margin projects with low net fund involvement Global Services Revenue Split Target profitable projects with low fund involvement 45% • Partnering with leading telcos in India to deploy 5G networks. STL is one of the preferred partner for Airtel in India India Public 62% • India
Slide 20: Achieved operational break even in March'23 in UK operations
Achieved operational break even in March’23 in UK operations UK revenue up & operating losses down on QoQ • STL UK has achieved operational break even in the month of Mar’23 • Q4 FY23 revenue has gone up and operating losses have come down on QoQ basis • Sales engine is focused on increasing share o
Slide 21: Project execution on track
Project execution on track India - Public India - Private UK Transformative Modern Optical Rural digital inclusion Network Gigabit Networks Fibre roll out Fibre roll out Telangana 63% (Large Indian telco) Completed Phase - 2 100% Completed Bharatnet Project Phase - 3 17% Completed Network Modernizat
Slide 22: Entry in multi trillion dollar IT Industry to build Digital business
Entry in multi trillion dollar IT Industry to build Digital business Delivered on Progress towards Pivot in Entry in multi Financials 1 Strategic Priorities 2 becoming top 3 in Optical 3 Global Services 4 trillion dollar IT Industry 5 continue to improve 6 Corporate Action © 2023-2023 Sterlite Techn
Slide 23: Raman Venkatraman, CEO, STL Digital
Raman Venkatraman CEO, STL Digital A strong believer in the power of high-performing teams, Raman has ~30 years of experience spanning multiple leadership roles across geographies. Prior to STL, he was associated with TCS as the Senior VP and Global Head of Hitech and Professional Services vertical
Slide 24: STL Digital: Entry in IT Services Industry
STL Digital | ENTRY IN IT SERVICES INDUSTRY Industry Tailwinds STL Capabilities • Global IT spending to exceed $4 trillion in • Through our ability to attract the talent, we 2023, growth of single digit over 2022 onboarded experienced leadership to explore the full potential of the business • Busine
Slide 25: STL Digital Snapshot
STL Digital | SNAPSHOT Identity Service Offerings Industry Vertical • Cloud & Cyber Security • Technology 1 • Life Sciences, Healthcare & • Data Analytics & AI Manufacturing • Enterprise SaaS Services • Communication, Media & • Delivery Centre in Services Bangalore • Product Engineering • Consumer •
Slide 26: STL Digital Differentiators
STL Digital | DIFFERENTIATORS Domain Leadership Agile and Nimble Ecosystem Alliances & Technology Strength Organization and Investments Years of Experience in Core leadership team with Seasoned Strategic investments & multi-industry domain 200+ person years experience teams developing partner ecosys
Slide 27: P&L reaches normalised profitability; strengthen balance sheet in FY24
P&L reaches normalised profitability To Strengthen Balance sheet in FY24 Delivered on Progress towards Pivot in Entry in multi Financials 1 Strategic Priorities 2 becoming top 3 in Optical 3 Global Services 4 trillion dollar IT Industry 5 continue to improve 6 Corporate Action © 2023-2023 Sterlite T
Slide 28: Tushar Shroff, Group CFO
Tushar Shroff Group CFO Tushar has a rich experience of nearly three decades and is highly focused on building resilient and value-creating organizations. Tushar has deep expertise in the areas of fundraising, capital structuring, merger & acquisition, treasury management, taxation, financial accoun
Slide 29: Q4 FY23 Revenue and EBITDA up by 25% & 71% YoY
Q4 FY23 Revenue and EBITDA up by 25% & 71% YoY respectively +71% +25% 280 1,883 1,872 251 1,684 234 1,487 1,497 166 164 15.0 13.9 13.3 11.0 11.2 Q1FY23 Q2FY23 Q3FY23 Q4FY22 Q4FY23 Q1FY23 Q2FY23 Q3FY23 Q4FY22 Q4FY23 Revenue from continued operations * (INR Cr.) EBITDA % EBITDA from continued operatio
Slide 30: FY23 Revenue and EBITDA up by 27% & 29% YoY
FY23 Revenue and EBITDA up by 27% & 29% YoY respectively +27% +29% 6,925 931 5,437 723 13.3 13.4 FY22 FY23 FY22 FY23 Revenue from continued operations * (INR Cr.) EBITDA % EBITDA from continued operations* (INR Cr.) +51% 245 162 Revenue from cont. operations grew by 27% YoY • Strong optical revenue
Slide 31: Grew 46% YoY in Optical Networking business in FY23
Grew 46% YoY in Optical Networking business in FY23 Revenue from continued EBITDA from continued Operations* (INR Cr.) operations* (INR Cr.) EBITDA % +40% +161% Q4 FY23 Revenue up 40% YoY 1,505 321 1,486 302 • OFC volume up 1,313 262 1,074 1,137 • Improved OFC realization 161 123 21.3 Q4 FY23 EBITDA
Slide 32: Consolidated towards strategic segments in Global Services
Consolidated towards strategic segments in Global Services Revenue from continued EBITDA from continued Operations* (INR Cr.) operations* (INR Cr.) EBITDA % 463 411 381 22 36 Q4 FY23 Revenue at INR 352 Cr. 367 352 • Consciously selective order intake & execution 14 Q4 FY23 EBITDA at INR 14 Cr. 6 5 7
Slide 33: Revenue mix is moving to segments and geographies of choice
Revenue mix is moving to segments and geographies of choice Customer Segments Geographical Distribution Key Order Wins Revenues from continued operations Revenues from continued operations Q4 FY23 (INR Cr.) (INR Cr.) 5,437 6,925 5,437 6,925 • Long distance & Intracity fibre roll 8% 4% 2% 2% 5% 0.1%
Slide 34: Stable order book to execute in FY24
Stable order book to execute in FY24 11,399 7,155 11,052 Open Order 3,897 Order Book Book (INR Cr.) Spread (INR Cr.) Q4FY22 Q4FY23 FY24 FY25 and beyond Cloud Open Order Book Digital & Technology Open Order Enterprises 4% Customer wise 6% Book BU wise 18% Global Services - Capex 21% 49% Optical Netwo
Slide 35: Consolidated Financials: Abridged Version
Consolidated Financials: Abridged Version P&L (INR Cr.) Q4 FY22 Q4 FY23 FY22 FY23 Balance Sheet FY22 H1 FY23 FY23 (INR Cr.) Revenue 1,497 1,872 5,437 6,925 Net Worth 2,047 2,006 2,095 EBITDA 164 280 723 931 (incl. minority Interest) EBITDA % 11.0% 15.0% 13.3% 13.4% Net Debt 2,782 3,239 3,121 Depreci
Slide 36: Financial Priorities FY24
Summary : Financial Priorities FY24; To revisit periodically Revenue 10 ~ 12% Growth Rate Net Move to less than 2.5x Debt/EBITDA 36
Slide 37: 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 38: Corporate Action
Corporate Action Delivered on Progress towards Pivot in Entry in multi Financials 1 Strategic Priorities 2 becoming top 3 in Optical 3 Global Services 4 trillion dollar IT Industry 5 continue to improve 6 Corporate Action © 2023-2023 Sterlite Technologies Limited 38
Slide 39: 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 40: 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 41: Summary
Summary Delivered on Progress towards Pivot in Entry in multi Financials Corporate 1 Strategic 2 becoming top 3 in 3 Global 4 trillion dollar 5 continue 6 Action Priorities Optical Services IT Industry to improve © 2023-2023 Sterlite Technologies Limited 41
Slide 42: Summary
Summary Profitable growth in Optical business: Continue to gain market share in optical fibre cable in our focus markets & Increase optical connectivity attach rate. Continue to optimise cost simultaneously Consolidation towards strategic segments in Global services: Focus on India Private, Move tow
Slide 43: Lets answer your queries
Lets answer your queries Delivered on Progress towards Pivot in Entry in multi Financials Corporate 1 Strategic 2 becoming top 3 in 3 Global 4 trillion dollar 5 continue 6 Action Priorities Optical Services IT Industry to improve © 2023-2023 Sterlite Technologies Limited 43
Slide 44: beyond tomorrow
beyond tomorrow © 2022-2023 Sterlite Technologies Limited 44
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