Sterlite Technologies Limited · NSE:STLTECH
Sterlite Technologies — Investor Presentation (February 2023)
41 slides from Sterlite Technologies's investor presentation, February 2023
Slide 1: Investor Presentation Feb'23
stl.tech Investor Presentation Feb‘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 STL Industry STL STL Annexure Overview Businesses updates growth strategy financials © 2022-2023 Sterlite Technologies Limited 3
Slide 4: We Integrate Digital Networks for Our Customers
Core We Integrate Digital Networks Business for Our Customers Customer Cloud Citizen Large Segments Telcos Companies Networks Enterprises Optical Global Digital & Business Units Networking Services Technology Business Solutions • Glass Preform • Network Modernisation • Building new business & Unique
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 200,000+ MT 16 Two of the Big Four Waste diverted from landfills (FY19 – Nov’22) Aligned with 15 of the 1
Slide 6: Our Businesses
Our Businesses 1 2 3 4 Company Our Industry Future STL Annexure Overview Businesses updates growth levers financials © 2022-2023 Sterlite Technologies Limited 6
Slide 7: Optical Networking Business: Vertically Integrated Manufacturing
1 Optical Networking Business Vertically Integrated Manufacturing Optical Fibre (OF) Optical Fibre Cable (OFC) + Specialty Cable (SCB) Optical Interconnect (OI) 2 Shendra, Waluj, Jiangsu Sterlite Rakholi, Silvassa Metallurgica Sterlite Conduspar South Carolina, Dadra & Nagar Optotec Aurangabad, Indi
Slide 8: Optical Networking Business: Industry leading products & global customer base
1 Optical Networking Business Industry leading products & 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
Slide 9: Global Services Business: Large scale project execution in India & UK
2 Global Services Business Large scale project execution in India & 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
Slide 10: Industry Updates
Industry Updates 1 2 3 4 Company STL Industry STL STL Annexure Overview Businesses updates growth strategy financials © 2022-2023 Sterlite Technologies Limited 10
Slide 11: Strong investment momentum in 5G, FTTH, Datacenter and citizen networks
Strong investment momentum in 5G, FTTH, Datacenter and citizen networks 5G FTTH Data centres Citizen Networks • 5G Investments expected • Frontier reached half way • Data center CAPEX to • US investing $97 bn. in to be $500 Bn. from 2022 of 10 Mn. FTTH target increase from $263 Bn. broadband through
Slide 12: Fibre investments remain at the heart of digital networks creation
Fibre investments remain at the heart of digital networks creation AT&T to form JV with Blackrock • JV to operate commercial fibre platform “Let’s focus the company on wireless and fibre. That’s going to be the future of AT&T. Relative to prior builds, the build over the last couple of • Plans to de
Slide 13: Steady growth in demand for optical fibre cable & optical interconnect
Steady growth in demand for optical fibre cable & optical interconnect Global Ex-China OFC Demand region wise ( Mn Fkm) Optical Interconnect Demand ($ Bn.) 7.6%* 624 9.8 601 +7% 572 CAGR 534 127 Region 116 2022-25 103 7.5 40% 91 79 North 72 75 12% 65 America 22 24 26 41% 18 49 50 51 46 Europe 7% 50
Slide 14: 5G deployments in India picking pace
5G deployments in India picking pace 5G deployments picking up pace • Bharti Airtel launched 5G services in more than 30 cities; Plan to cover India by march 2024 • Jio launched 5G services in more than 100 cities; To cover India by end of 2023 • Top 2 telcos rolling out approx. 3,500 5G sites per w
Slide 15: 3 investments cycles are coinciding
We are in a decade long investment cycle Multi-year network build cycle 1 2 3 FTTx 5G Increase in FTTx penetration & Hyperscalers Increased demand of fibre due to network modernisation by Increased demand of fibre due to cell densification governments leading to increase capex increase, particularly
Slide 16: STL Growth Strategy
STL Growth Strategy 1 2 3 4 Company STL Industry STL growth STL Annexure Overview Businesses updates strategy financials 16
Slide 17: STL strategy on track: Grow, Consolidate
STL strategy on track 1 2 Grow Consolidate Optical Business Services Business • Increase global OFC market share • Focus only on strategic segment & execute projects with low • Increase OI attach rate working capital investment • Develop industry leading new products • Build sustainable revenue with
Slide 18: Grow Optical Business: Increase OFC market share
1 Grow Optical Business Increase OFC market Share ; Focus on long term contracts Global ex-China OFC Secured Market share 12% Additional orders in 9% multi - million dollar, multi - year contract 8% with 5% a leading North American broadband connectivity FY20 FY21 FY22 9M FY23 company (E) Gaining ma
Slide 19: Grow Optical Business: Target full capacity utilisation for new plants
1 Grow Optical Business Target full capacity utilisation for new plants by H1 FY24 Optical Fibre Facility, China Optical Fibre Cable Facility, USA Commercial production starts at China OF & US OFC facility © 2022-2023 Sterlite Technologies Limited 19
Slide 20: Grow Optical Business: Increase Optical Interconnect attach rate
1 Grow Optical Business Increase Optical Interconnect attach rate ; Develop new products & new markets Products Products Optical Interconnect Existing New attach rate H1 FY23 attach rate 1. 3. Market lower due to xxx Cloud Europe 11% Existing To develop new To increase wallet products by 10% share b
Slide 21: Consolidate in strategic segments in Global Services business
2 Consolidate in strategic segments in Global Services business Focus on profitable projects at favourable payment terms in India Private Global Services Revenue Split Building order book by selectively targeting profitable projects at favorable payment terms 46% • Targeting selective order intake i
Slide 22: Global Services: Project execution on track
2 Consolidate in strategic segments in Global Services business Project execution on track India - Public India - Private UK Transformative Gigabit Networks Modern Optical Network Rural digital inclusion Fibre roll out Telangana 61% (Large Indian telco) Completed Phase - 1 100% Completed Bharatnet P
Slide 23: Reallocating capital & management bandwidth
Digital & Technology Solutions Reallocating capital & management bandwidth Divested Telecom Software Business • Telecom Software business provides BSS and OSS Solutions to Telcos and Enterprises • Consideration at USD 15 Mn. adjusted for cash & debt Ramp down completed for Wireless business • Ramp d
Slide 24: Focus on strategic growth through capital allocation framework
Focus on strategic growth through capital allocation framework Cash flow from operations Allocate Investments towards optical Improved margins & working capital in optical business OFC capacity expansion Reduce working capital in services business Optical Interconnect expansion New Product developme
Slide 25: Summary
Summary Profitable growth in Optical business: Continue to gain market share in our focus markets, Increase optical interconnect attach rate & improve margins Consolidation towards strategic segments in Global services: Focussing on projects from Indian Telcos. Aim to reduce capital deployed in this
Slide 26: STL Financials
STL Financials 1 2 3 4 Company STL Industry STL STL Annexure Overview Businesses updates growth Strategy financials
Slide 27: Stable order book
Stable order book Open Order Book (INR Cr.) Order Book Spread (INR Cr.) 12,054 10,413 11,531 1,641 Q2FY23 Q3FY23 Q4 FY23 FY24 and Beyond Open Order Book Customer wise Open Order Book BU wise Digital & Technology Enterprises 5% Global Services - Capex 19% 20% 52% Optical Citizen networks 17% 64% Telc
Slide 28: 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 Q3 FY23 (INR Cr.) (INR Cr.) 3,936 5,050 3,936 5,050 4% 1% 2% 8% 6% • Additional orders in multi million 0.1% do
Slide 29: Q3 FY23 Revenue and EBITDA up by 12% & 8% QoQ
Q3 FY23 Revenue and EBITDA up by 12% & 8% QoQ respectively +46% +12% +8% 1,882 252 1,683 234 1,287 8 Q3 FY22 Q2 FY23 Q3 FY23 Q3 FY22 Q2 FY23 Q3 FY23 Revenue from continued operations * (INR Cr.) EBITDA from continued operations* (INR Cr.) +17% 66 77 Revenue from cont. operations grew by 12% QoQ • St
Slide 30: 9M FY23 Revenue and EBITDA up by 28% & 17% YoY
9M FY23 Revenue and EBITDA up by 28% & 17% YoY respectively +28% +17% 5,050 651 557 3,936 9M FY22 9M FY23 9M FY22 9M FY23 Revenue from continued operations * (INR Cr.) EBITDA from continued operations* (INR Cr.) +7% 151 162 Revenue from cont. operations grew by 28% • Strong optical revenue growth EB
Slide 31: Profitable growth in Optical business
Profitable growth in Optical business Revenue from continued EBITDA from continued Operations (INR Cr.) operations (INR Cr.) +78% +13% Revenue up 13% QoQ +215% +15% 1,486 302 • OFC volume up 1,313 262 • Improved OFC realization 837 EBITDA up 15% QoQ • Product mix shift towards higher margin products
Slide 32: Consolidation towards strategic segments in Global Services
Consolidation towards strategic segments in Global Services Revenue from continued EBITDA from continued Operations* (INR Cr.) operations* (INR Cr.) Revenue down by 8% QoQ -22% -8% 492 -104 4 4 • Consciously selective order intake & 413 execution 382 EBITDA flat QoQ • Improved Project management & f
Slide 33: Digital & Technology solutions
Digital & Technology solutions Revenue from continued EBITDA from continued Operations* (INR Cr.) operations* (INR Cr.) +380% 24 0 -34 -34 Revenue up by 380% QoQ • Building new business in digital & technology solutions • Currently in the capability building phase 5 0 Q3FY22 Q2FY23 Q3FY23 Q3FY22 Q2F
Slide 34: Consolidated Financials: Abridged Version
Consolidated Financials: Abridged Version P&L (INR Cr.) Q3 FY22 Q2 FY23 Q3 FY23 9M FY22 9M FY23 YoY Revenue 1,287 1,683 1,882 3,936 5,050 28% EBITDA 8 234 252 557 651 17% EBITDA % 1% 14% 13% 14% 13% Depreciation 86 76 78 221 231 EBIT (78) 158 174 336 420 Interest 64 77 78 169 222 PBT from continued
Slide 35: Annexure
Annexure 1 2 3 4 Company STL Industry STL growth STL Annexure Overview Businesses updates strategy financials © 2022-2023 Sterlite Technologies Limited 35
Slide 36: With a strong board in place
With a strong board in place © 2022-2023 Sterlite Technologies Limited 36
Slide 37: Key Management People
Key Management People 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 Off
Slide 38: Corporate structure and shareholding pattern
Corporate structure and shareholding pattern Corporate structure Shareholding pattern As on Dec 31st, 2022 As on Dec 31st, 2022 Public Promoters & Shareholders Promoter Group 45.91% 54.09% 35.2% Non Institutional z Holding 54.1% Promoters and Promoter Group* 10.8% Institutional Holding Clearcomm Met
Slide 39: STL in Numbers
STL in Numbers INR 5,050 Cr. 9M FY23 Revenue Americas (37%), SOFTWARE Europe (35%), India (26%), RoW(2%) DEVELOPMENT CENTRES MANUFACTURING Customers in UNITS 100+ countries SALES OFFICES 9 GLOBAL FOOTPRINT Global production facilities 4 Innovation Centres Great place to 640* Zero work, BCG, Global S
Slide 40: beyond tomorrow
beyond tomorrow © 2022-2023 Sterlite Technologies Limited
Slide 41: Annexure: Key Business risks
Annexure : Key Business risks S.No. Risk Risk Definition Comment Q3 FY23 Geo Political & Economic Uncertainty in economic (Inflation, increase in interest rate, etc), political 1 Focus on cash generation ; Review and divestments of sub scale assets Risk conditions may lead to adverse effects. Reduct
Sterlite Technologies — Investor Presentation (February 2023) on 6ix