Sterlite Technologies Limited · NSE:STLTECH
Sterlite Technologies — Investor Presentation (November 2022)
41 slides from Sterlite Technologies's investor presentation, November 2022
Slide 1: Investor Presentation Nov'22
stl.tech Investor Presentation Nov‘22
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 • Digital BSS Platforms Unique C
Slide 5: Driven by our purpose to transform lives
Driven by our purpose to transform lives Committed to Net-Zero Emissions by 2030 ENVIRONMENTALLY SOCIALLY SOCIALLY GOVERNED SUSTAINABLE R RESPONSIBLE ESPONSIBLE WITH CARE Zero Waste to Landfill Certified1 Committed to the UN SDGs2 Strong Internal Governance 175,000+ MT 16 Two of the Big Four Waste d
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 Cable (OFC) + Specialty Cable (SCB) Optical Fibre (OF) Optical Interconnect (OI) Jiangsu Sterlite Shendra Waluj Tongguang Fibre Rakholi Metallurgica Sterlite Dadra & Nagar Optotec Aurangabad Aurangabad Co. Limited Silvas
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 : • $125 Bn. earmarked for • Data center CAPEX to • US implementing expected to be $500 Bn. FTTH deployments in the grow by 10% CAGR over investment of $65 bn. in from 2022
Slide 12: Steady growth in demand in Optical fibre cable & Optical Interconnect
Steady growth in demand in Optical fibre cable & Optical Interconnect Global Ex-China OFC Demand region wise ( Mn Fkm) Optical Interconnect Demand ($ Bn.) 6.5% 606 9.8 576 +7% 540 116 Region CAGR 502 102 2021-24 92 7.5 40% 82 75 North America 12% 72 67 27 66 23 Europe 4% 41% 20 50 52 17 48 45 53 54
Slide 13: 5G services launched in India by PM Modi
5G services launched in India by PM Modi 5G Services launched in India • PM modi launched 5G services in India at IMC • Bharti Airtel launched 5G in 8 cities; cover India by 2024 • Jio launched 5G in 4 cities; To cover India by end of 2023 • Telcos to Invest $18 bn. to $ 22 bn. in non-spectrum capex
Slide 14: 3 investment 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 15: STL Growth Strategy
STL Growth Strategy 1 2 3 4 Company STL Industry STL growth STL Annexure Overview Businesses updates strategy financials 15
Slide 16: STL Growth Strategy on track
STL Growth Strategy on track 1 2 Grow Consolidate Optical Business Services Business • Focus on profitable projects in • Increase global OFC market share strategic segments in India & UK particularly in US • Build sustainable revenue with • Increase OI attach rate Operations and maintenance contract
Slide 17: Grow Optical Business: Increase OFC market share
1 Grow Optical Business Increase OFC market Share I Won multi year OFC contract in North America Global ex-China OFC Americas OFC Market share Market share Secured 11% 14% multi - million dollar, 9% multi - year contract 8% with 5% 7% a leading North American 2% 1% broadband connectivity FY20 FY21 F
Slide 18: US OFC facility & China OF facility operational
1 Grow Optical Business Increase OFC market share I US OFC facility & China OF facility operational Optical Fibre Facility, China Optical Fibre Cable Facility, USA Aiming to reach full capacity utilisation by Q1 FY24 © 2022-2023 Sterlite Technologies Limited 18
Slide 19: Increase Optical Interconnect attach rate
1 Grow Optical Business Increase Optical Interconnect attach rate Optical Interconnect attach rate Opto- Bolt Secured Terminal Customer order H1 FY23 attach rate pushed lower due to xxx revenues to H2 FY23 multi - million dollar, 11% multi - year contract 9% Drop Cable with 3% a leading European Tel
Slide 20: Develop Industry first new products & solutions
1 Grow Optical Business Develop Industry first new products & solutions Multiverse 5G Cosmos Gram Galaxy India’s first multicore fibre for 4x capacity Tower and small cell fiberisation India focused solution for rural fiberisation. for 5G networks and Fibre to the x networks solution for 5G networks
Slide 21: Building profitable order book in strategic segment of Telcos
2 Consolidate in strategic segments in Global Services business Focus on strategic segments I Growing order intake from telcos in India Building order book by selectively targeting profitable projects in strategic segments • Growing order intake in India • Sustainable revenue with operations and mai
Slide 22: Build sustainable revenue: Project Execution on track
2 Consolidate in strategic segments in Global Services business Build sustainable revenue I Project Execution on track India - Public India - Private UK Transformative Gigabit Networks Modern Optical Network Rural digital inclusion Fibre roll out Telangana 57% (Large Indian telco) Completed Phase -
Slide 23: Non core divestment to consolidate in strategic segments
2 Consolidate in strategic segments in Global Services business Focus on Strategic segments I Divested IDS business Divested Equity interest in IDS to Hexatronic Group AB • IDS operates in niche segment of inside datacentre connectivity & containment solutions • Initial Consideration at GBP 9.6 mn.
Slide 24: Digital & Technology Solutions: Reallocating capital & management bandwidth
Digital & Technology Solutions Reallocating capital & management bandwidth Pivoting to Digital business • Building new capability to pivot from network software to digital business Ramp down of Wireless business • Envisioned disruption in RAN market through open, disaggregated & programmable Solutio
Slide 25: Focus on strategic growth through prudent capital allocation framework
Focus on strategic growth through prudent capital allocation framework Cash flow from operations Allocate Investments towards optical Improved margins & working capital in optical business OFC capacity expansion Ramp down of wireless business Optical Interconnect expansion Total Funds New Product de
Slide 26: Summary
Summary Strong demand for Optical Fibre Cable & Optical Interconnect : Multi-year network build cycle in full swing in our focus markets of North America, Europe and India. Ambition to achieve global leadership in Optical Business: Continue to achieve strong market share gains in North America and E
Slide 27: STL Financials
STL Financials 1 2 3 4 Company STL Industry STL STL Annexure Overview Businesses updates growth Strategy financials
Slide 28: Highest order book intake since last 3.5 years
Highest order book intake since last 3.5 years Open Order Book (INR Cr.) Order Book Intake & short closing (INR Cr.) Order Book Spread (INR Cr.) 11,697 3,199 8,237 11,207 3,460 941 Q1FY23 Q2FY23 Intake Q2 FY23 Short Close 6M FY23 FY24 and Beyond Q2 FY23 Open Order Book Customer wise Open Order Book
Slide 29: 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 (INR Cr.) Revenues (INR Cr.) Q2 FY23 5,154 4,825 5,754 3,343 5,154 4,825 5,754 3,343 • Multi million dollar, multi year contract 5% 4% 7% 8% 2% with a leading North America
Slide 30: Revenue up by 12%, EBITDA up by 70% QoQ
Revenue up by 12%, EBITDA up by 70% QoQ +12% 269 +70% 1,768 1,508 1,582 1,575 202 1,356 25 122 119 26 177 96 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 -35 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23* Revenue (INR Cr.) EBITDA (INR Cr.) 106 Note: Q4 FY22 EBITDA includes INR 26Cr. gain on MTCIL sale Q2 FY23
Slide 31: Profitable growth in Optical business
Profitable growth in Optical business Revenue (INR Cr.) EBITDA (INR Cr.) Revenue up 15% QoQ +15% +63% • OFC volume up 1,313 262 • OFC realization up due to product mix 1,137 • OFC realisation up due to price increase 161 EBITDA up 63% QoQ • Product mix shift towards higher margin products • OFC Pric
Slide 32: Consolidation towards strategic segments in Global Services
Consolidation towards strategic segments in Global Services Revenue (INR Cr.) EBITDA (INR Cr.) Revenue up by 11% QoQ +11% -65% • Services India execution up 463 34 419 EBITDA down 65% QoQ • One time gain in Q1 FY23 • India margin inching to desired profitability 12 • UK business losses lowered overa
Slide 33: Targeting profitability in Digital & Technology solutions in FY24
Targeting profitability in Digital & Technology solutions in FY24 Revenue (INR Cr.) EBITDA (INR Cr.) Revenue down by 2% QoQ -2% -19 41 40 -83 -102 • Building new capability to pivot from network software to digital business EBITDA down by INR 19 Cr. QoQ • Higher initial upfront manpower costs in dig
Slide 34: H1 FY23 Cash Flow
H1 FY23 Cash Flow Working capital increase due to contract assets in services business 456 178 247 87 20 3,239 2,782 Net Debt FY22 Cash Profit Net Investments Dividend Capex Working Capital Net Debt H1 FY23 INR Cr. after tax INR Cr. Target to reduce Net Debt / EBITDA by Q4 FY23 © 2022-2023 Sterlite
Slide 35: Consolidated Financials: Abridged Version
Consolidated Financials: Abridged Version P&L (INR Cr.) FY20 FY21 FY22 Q1 FY23 Q2 FY23 Balance Sheet (INR Cr.) FY20 FY21 FY22 H1 FY23 Revenue 5,154 4,825 5,754 1,575 1,768 Net Worth 2,023 2,085 2,047 2,006 (including minority interest) EBITDA 1,104 854 594 119 202 EBITDA % 21% 18% 10% 8% 11% Net Deb
Slide 36: Annexure
Annexure 1 2 3 4 Company STL Industry STL growth STL Annexure Overview Businesses updates strategy financials © 2022-2023 Sterlite Technologies Limited 36
Slide 37: With a strong board in place
With a strong board in place © 2022-2023 Sterlite Technologies Limited 37
Slide 38: 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 KS Rao Amit Deshpande Chief Corporate Officer Co
Slide 39: Corporate structure and shareholding pattern
Corporate structure and shareholding pattern Corporate structure Shareholding pattern As on Sep 30th, 2022 As on Sep 30th, 2022 Public Promoters & Shareholders Promoter Group 45.89% 54.11% 34.19% Non Institutional z Holding 54.11% Promoters and Promoter Group* 11.70% Institutional Holding Clearcomm
Slide 40: STL in Numbers
STL in Numbers INR 3,343 Cr. H1 FY23 Revenue Americas (33%), SOFTWARE Europe (38%), India (27%), RoW(2%) DEVELOPMENT CENTRES MANUFACTURING Customers in UNITS 100+ countries SALES OFFICES 9 GLOBAL FOOTPRINT Global production facilities 4 Innovation Centres Great place to 742 Zero work, BCG, Global Se
Slide 41: beyond tomorrow
beyond tomorrow © 2022-2023 Sterlite Technologies Limited
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