Optical fiber maker STL reports Rs 57 crore net loss in Q3

STL

Home-grown optical fiber maker Sterlite Technologies Limited (STL) reported a net loss of 57 crore in the third quarter ending December 31, 2023, against Rs 51 crore net profit in the same quarter last year.

STL reported a 12 percent sequential decline in revenue and EBITDA in Q3 amidst ongoing optical demand headwinds, especially in the US and parts of Europe.

The company reported Rs 1,322 crore in revenues for the quarter and an order book of Rs 9,849 crore across its three business units- Optical Networking, Global Services, and Digital.

The company's EBITDA growth stood at Rs 89 crore, down 58 percent in the latest quarter, compared to Rs 213 crore from July to September. The company's margin was 6.7 percent in the current quarter against 14.3 percent in the second quarter.

STL’s Global Services Business recorded sequential revenue and EBITDA growth, with strategic orders for fiber deployment and data centres.

STL Digital, STL’s newly incubated IT services business, reported a strong deal flow in the nine months of FY24 and sequentially reduced EBITDA losses to inch closer to breaking even.

At an overall company level, STL also reduced its net debt by Rs 174 crore from FY 23.

The company said that telecom and broadband providers are re-adjusting their order planning in response to macroeconomic factors like higher capital costs, inflation, and inventory buildup, resulting in temporary demand softening for optical fiber cables.

Market feedback indicates a gradual recovery from Q2 FY 25 onwards. Despite weak operator spending and soft demand during the better part of the current fiscal, STL’s Optical Business maintained a steady EBITDA percent of 18.4 percent on a 9-month basis, the company said in its earnings statement.

“Be it 5G or Generative AI, one technology trend after the other is reaffirming the strategic role of optical fiber in networks. While this downturn is temporary, the cost base and capabilities we have built around product design, quality, manufacturing presence, and sustainability will reap benefits far into the future,” said Ankit Agarwal, Managing Director, of STL.

“Regardless of the market cycle, we are as customer-centric as ever. I am confident that once the optical demand is normalised, we will hit the ground running and fast track towards becoming one of the top 3 optical players in the world,” he added.

Taking a long-term view amidst ongoing market conditions, STL said it continues aggressively driving business fundamentals of deep customer engagement, product innovation, and sustainability.

STL said it is using this period to become lean and agile and establish an industry-leading cost model.

“With a balanced approach of focusing on long-term fundamentals, strategic cost actions, geographically dispersed manufacturing units and capacities, along with a certified and field-tested portfolio of meaningful optical products, STL stands ready to deliver on the demand when the market conditions turn,” STL said.