Shisha @Shisha7474 - Twitter Profile

Everyone's talking about Sterlite tech Some are calling it bubble of the century. Let's try to cut the noise and look at facts & data. ----------------- First of all, Sterlite tech is a classic turnaround story. So, if you are looking at TTM PE ratio in screener which shows 500+ and calling it a bubble, you need to learn the basics. ---------------- Demand and orderbook Basically, Sterlite is going through a huge demand tailwinds cycle driven by the AI capex and also FTTH and 5G rollouts. As a result, the orderbook has surged. As of Q4FY26, Sterlite tech had an orderbook of 7600 Cr. After that, it has received a $1.1Bn order from a hyperscaler. So, my guess is the Orderbook right now is probably 18000-20000 Cr, providing multi-year visibility. ----------------- Margins set to explode With the huge surge in orderbook, operating leverage will start to really come into play. Sterlite does not reveal exact capacities, but it is pretty clear they have lot of spare capacity (utilization is probably <50%). Secondly, the % of DC orders in the orderbook is much higher which have higher margin and higher value added products like hollow-core fiber, recently launched Neuralis etc. Thirdly, the US tariffs overhang is mostly gone which will reflect in margins from Q1FY27. Finally, Sterlite is one of the few manufacturers in the world with preform integration. Global preform prices are exploding rapidly, so the backward integration provides Sterlite margin stability ------------------- Earnings and valuations With such a huge orderbook and expanding margins, Sterlite's earnings is poised for exponential growth. As per Nuvama, FY27 PAT is expected to be 550 Cr, which means it is trading at 55 PE on FY27 epS If we look at FY28, PAT is expected to be 912 Cr which means its trading at 32 times on FY28 epS. Keep in mind that these estimates were done before the huge $1.1 Bn Hyperscaler order. As per my own estimates, I expect PAT to cross 600 Cr in FY27 and 1000 Cr in FY28. So, on FY27 and FY28 basis, stock might not be cheap but it's not a 'bubble' by any definition. There are 100's of stocks in Indian stock market trading at much higher valuations. Obviously, the risk here is that the management has to execute this huge orderbook properly which needs to be tracked. ----------------- Disclosure I am invested and biased. I have booked profits on 40% of my position and holding the rest. Why am I still holding? Because my entry is at way lower prices and stock is up 3.5X from my entry point, I have a higher risk apetite in this case. Secondly, I feel margins can really surprise on the upside. If you look back, Sterlite had 22-23% margins in upcycles. The current cycle looks to be strongest ever and also the complexity of products in higher for AI DCs. So, margins can surprise on the upside which is not yet captured in the estimates. --------------- This is not a buy/sell reco, do you own research before investing. Cheers