Sterlite Technologies Limited · NSE:STLTECH

Sterlite Technologies — Q4 FY22 Earnings Presentation

37 slides from Sterlite Technologies's earnings presentation, Apr 28, 2022

  1. Slide 1: Mission Mode: Earnings Call Q4 FY22

    stl.tech Mission Mode Earnings Call Q4 FY22 28th Apr. 2022

  2. 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

  3. Slide 3: Ankit Agarwal, Managing Director

    Ankit Agarwal Managing Director

  4. Slide 4: Strong Industry Tailwinds

    Strong Industry Tailwinds Strong Industry 2. STL growth strategy 3. Financials 4. Q&A Tailwinds on track © 2022-2023 Sterlite Technologies Limited

  5. Slide 5: Network creators and Governments continue to invest heavily in digital infrastructure

    01 Network creators and Governments continue to invest heavily in digital infrastructure ENHANCED SPENDING BY NETWORK CREATORS AT&T Capex set to Plans to cover Ramps up deployment plans Meta allocates Plans to invest rise from 60% of Italy's from 2.5 Mn. to 12 Mn. end $31.5 Bn capex in $15.0 Bn cape

  6. Slide 6: The decade long digital network build cycle is here

    02 Investments powering 5G, FTTx, Datacentres and ORAN deployments Datacentres 5G becoming the FTTx growing Large scale massively in Europe, Increasing Capex by fastest growing deployments on cards US, India datacentres technology from 2023 • 5G Investments : $500 • Italy's Open Fiber plans • Data c

  7. Slide 7: Massive fibre deployment underway across the globe

    03 Massive fibre deployment underway across the globe UK Europe & North America India • Openreach plans to reach 25 • Deutsche Telekom targets 2 Mn. • Govt approves Bharat Net for Mn. homes by 2026 homes in 2022 360,000 villages • Netomnia plans 1 Mn. homes • Open Fiber targets to reach 24 Mn. • Tel

  8. Slide 8: Leading to sustainable growth in global OFC Volumes

    04 Leading to sustainable growth in global OFC Volumes OFC Demand region wise ( Mn Fkm) 5% 634 648 613 584 -4% 544 116 122 110 511 501 102 2021-26 ( 5 Year CAGR) 479 470 90 64 81 86 91 94 68 73 81 North America 9% 55 74 62 66 Europe 7% 55 China 3% 281 285 283 Non-China APAC 7% 279 263 275 239 237 24

  9. Slide 9: OFC prices are on the rise

    04 OFC prices are on the rise -37% -33% +21% -31% +9% +16% North America Europe Apac Non China 2018 2019 2020 2021 2022(P) Source: CRU Data 9 © 2022-2023 Sterlite Technologies Limited

  10. Slide 10: We are clearly in a multi-year network build cycle across the globe

    We are clearly in a multi-year network build cycle across the globe Multi-year digital network build cycle 1 2 3 Increase in FTTx penetration & 5G Capex by Hyperscalers network modernisation by Govt. Increased demand of fibre due to Increased demand of fibre Segment with continued strong cell densif

  11. Slide 11: STL Growth Strategy Is on track

    STL Growth Strategy Is on track 1. Strong Industry STL growth strategy 3. Financials 4. Q&A Tailwinds on track © 2022-2023 Sterlite Technologies Limited

  12. Slide 12: FY22 – A pivotal year in global expansion, product development and leadership

    FY 22 – A pivotal year in terms of global expansion, product development and solid leadership Poised for ₹ 11,639 Cr ₹ 5,754 Cr ~ ₹ 1,000 Cr Order Book Highest ever UK Market OOB Revenue growth Services Business * Revenue 18 to 33 Mfkm 6% market share Americas Clearcomm Crossed OFC Capacity Services

  13. Slide 13: Recap: STL Growth Levers

    Recap : STL Growth Levers 1 2 3 Grow Globalise Build Optical Business System Integration Wireless Solutions • Scale global OFC market share • Focus on profitable • Deliver 5G open RAN radios segments in India • Disrupt market with pFTTx • Establish presence in the US solution • Globalise services wi

  14. Slide 14: Increased Global OFC Market Share in all focus markets

    Grow Optical Business 1 Increased Global OFC Market Share in all focus markets Global ex-China OFC Europe OFC Market share North America & LATAM Market share OFC Market share 10% 25% 6% 8% 6% 16% 11% 2% 1% FY20 FY21 9M FY22 FY20 FY21 9M FY22 FY20 FY21 9M FY22 Target to become Top 3 global player in

  15. Slide 15: Established foothold in the US and scaled OI facility

    Grow Optical Business 1 Established foothold in the US and scaled OI facility Optical Fibre Cable Facility, USA Optical Interconnect Facility, India Going closer to the customer Scaled to more than 300 resources US manufacturing to Go Live in Q3 FY23 15 © 2022-2023 Sterlite Technologies Limited

  16. Slide 16: Increased Optical interconnect attach rate to 11%

    Grow Optical Business 1 Increased Optical interconnect attach rate to 11% Optical Interconnect attach rate Optical Interconnect Product Portfolio Opto - Connector Multi-port Ruggedized System terminal 100% Opto- Bolt Enclosures Terminal 20% 3% 11% FY21 FY22 FY23 (P) Industry Potential End to end opt

  17. Slide 17: ~₹1,000 Cr open Order Book for Services in the UK

    Globalise System Integration 2 Won orders in UK & India in Q4 FY22 Netomnia & STL team up to fiberize UK for ultra fast broadband “We have an ambitious target for our Ultrafast Full-Fibre broadband and we rely on superfast deployment to reach there by 2023. It is important for us to partner with pla

  18. Slide 18: Ramped up talent and execution in the UK market

    Globalise System Integration 2 Ramped up talent and execution in the UK market Building talent pool for network deployment in the UK • Building unique competitive advantage by training engineers at STL academy and keeping talent pool deployment ready for UK • Second batch with more than 100 trained

  19. Slide 19: Garuda, pFTTx and Wi-Fi6 made Generally Available

    Build Wireless Solutions 3 Garuda, pFTTx and Wi-Fi6 made Generally Available Rapidly growing addressable R&D driven Industry leading Traction with marquee STL at Market Products Customers MWC 2022 Radio Telcos & Private pFTTx RIC Hardware Altnets Enterprises ~$4-5B 8 10+ SHOWCASED TAM * (Current) GA

  20. Slide 20: Summary: Business Priorities

    Summary : Business Priorities 1. Optical Business : To become global Leader Global Services : Focus on profitable 2. segments in India and UK Wireless Business: Commercialise 3. products & build order book © 2022-2023 Sterlite Technologies Limited 20

  21. Slide 21: Financials: Q4 FY22 & Outlook FY23

    Financials : Q4 FY22 & Outlook FY23 1. Strong Industry 2. STL growth strategy Financials 4. Q&A tailwinds on track © 2022-2023 Sterlite Technologies Limited

  22. Slide 22: Mihir Modi, Chief Financial Officer

    Mihir Modi Chief Financial Officer © 2022-2023 Sterlite Technologies Limited

  23. Slide 23: Our order book is stable

    Our order book is stable Open Order Book (Rs. Cr.) Order Book Spread (Rs. Cr.) 11,639 10,754 6,621 5,018 Q4 FY21 Q4FY22 FY23 FY24 and Beyond Open Order Book Customer wise Open Order Book BU wise Open Order Book Capex vs Opex Digital and Wireless Enterprises 6% O&M 15% 22% Optical 37% Citizen network

  24. Slide 24: 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 (Rs. Cr.) Revenues (Rs. Cr.) Q4 FY22 4,825 5,754 4,825 5,754 2% 3% 3% 2% 14% 22% • Enabling Netomnia to fiberize multiple 7% cities with ultra fast broadband in UK 43% 11%

  25. Slide 25: Project Execution is on track

    Project Execution is on track India - Public India - Private Global Transformative UK Modern Optical Network Gigabit Networks Rural digital inclusion Bharatnet Projects Fibre roll out FTTH , UK T-Fibre 50% (Large Indian telco) 88% 3% Completed All Projects Completed Phase - 1 Completed 0% Phase - 2

  26. Slide 26: Strong inflation headwinds in raw materials and logistics cost

    Strong Inflation headwinds in raw materials & logistics cost in optical business Crude Oil LME Index 29% 15% increase in Q4 FY22 increase in Q4 FY22 • Key Raw materials exhibiting sharp increase are polymers (HDPE, PBT), Metals (Silicon, Steel tape), Gases (Helium, LNG) and speciality resins Natural

  27. Slide 27: Back to revenue growth QoQ by 17%; margin pressure

    Back to revenue growth QoQ by 17%; YoY by 7% Margin pressure due to RM cost & logistics cost inflation +7% +17% 1,508 1,582 273 269 1,475 255 1,309 1,356 122 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 -35 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Revenue (INR Cr.) EBITDA (INR Cr.) 124 116 Q4 FY22 EBITDA

  28. Slide 28: Financials: Abridged Version

    Financials: Abridged Version P&L (INR Cr.) Q4 FY21 Q4 FY22 FY21 FY22 Balance Sheet (INR Cr.) FY21 FY22 Revenue 1,475 1,582 4,825 5,754 Net Worth 2,085 2,042 EBIDTA 273 122 854 594 Net Debt 2,410 2,782 EBITDA % 19% 8% 18% 10% Depreciation 61 91 285 326 Total 4,495 4,824 EBIT 212 31 568 269 Fixed Asse

  29. Slide 29: FY23 Outlook

    FY23 Outlook : Chasing profitable & sustainable growth ; Focus on delivering margin expansion Q4 FY22 Revenue Split Growth Drivers Margin Expansion Optical Services Digital & Wireless Drivers Revenue Rs. 1,070 Cr. Rs. 502 Cr. Rs. 54 Cr. OPTICAL BUSINESS OPTICAL BUSINESS 68% 32% 3% • OFC Volume growt

  30. Slide 30: FY23 Capital Allocation

    FY23 Capital Allocation : Allocating capital to Optical Business Cash flow from operations Strong cash generation in Optical Business Organic Investment Total Funds Optical CAPEX Strong cash generation in Services Business available Cash flow from sale of non core Investments Strong Dividends Contin

  31. Slide 31: FY23 Cash Flow Outlook

    FY23 Cash Flow Outlook : Optimising working capital in services business to fund growth Optical business 2,782 Net Debt FY22 Cash Profit Working Capital Capex cash outflow Dividend Net Debt FY23 Rs. Cr. Rs. Cr. Credit Rating : AA by CRISIL and ICRA Aiming to maintain or marginally reduce Absolute De

  32. Slide 32: Summary: Financial Priorities FY23

    Summary : Financial Priorities FY23 Revenue Growth > 25% Rate Net Debt Maintain Absolute Debt RoCE > 20% at steady state 32

  33. Slide 33: We are also committed to deliver on our ESG targets

    We are also committed to deliver on our ESG targets ENVIRONMENTALLY SSOCIALLY OCIALLY GOVERNED SUSTAINABLE RESPONSIBLE WITH CARE World’s 1st ZWL Certified Committed to the UN SDGs Strong internal governance 45,000+ MT 15 Two of the Big Four Waste diverted from landfills Aligned with 15 of the 17 SDG

  34. Slide 34: Summary

    Summary Strong demand and pricing outlook for Optical Fibre Cable : Multi-year network build cycle in full swing. The global OFC volume & pricing expected to grow in FY23 Aiming for global leadership in Optical Business: Strong market share gains in Americas and Europe, increasing attach rate in OI.

  35. Slide 35: Lets answer your questions

    Lets answer your questions 1. Strong Industry 2. STL growth strategy 3. Financials Q&A tailwinds is on track © 2022-2023 Sterlite Technologies Limited

  36. Slide 36: beyond tomorrow

    beyond tomorrow © 2022-2023 Sterlite Technologies Limited 36

  37. Slide 37: Annexure: Key Business risks

    Annexure : Key Business risks S.No. Risk Risk Definition Comment Current Russia Ukraine conflict has no negative impact on revenue ; 1 Geo Political & Economic Risk Uncertainty in economic, political conditions may lead to adverse effects Significant factor in global supply chain disruption Reductio

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