Sterlite Technologies Limited · NSE:STLTECH
Sterlite Technologies — Q2 FY23 Earnings Presentation
32 slides from Sterlite Technologies's earnings presentation, Nov 4, 2022
Slide 1: Earnings Presentation Q2 FY23
stl.tech Earnings Presentation Earnings Call Q2 FY23 4th Nov 2022
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: Strong Industry Tailwinds
Strong Industry Tailwinds 1 2 3 4 Strong industry STL growth strategy Financials continue Q&A tailwinds continue on track to improve session © 2022-2023 Sterlite Technologies Limited 3
Slide 4: Telco capital intensity hit 10 year peak in Q2 2022
Telco capital Intensity hit 10 year peak in Q2 2022 Post - covid pent up demand, 5G core Strong Capex continues despite and Inflation economic headwinds • Telco capex at $329.5 bn. for 12 months ended June 2022 • Capital intensity (ratio of capex to revenues) at 10 year high at 17.8% • Many Telcos b
Slide 5: 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 $65 bn. in from 2022
Slide 6: Steady growth in demand in Optical fibre cable & Optical Interconnect
Steady growth in demand in Optical fibre cable & Optical Interconnect Global Ex-China OFC Demand region wise ( Mn Fkm) Optical Interconnect Demand ($ 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 7: 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 8: STL Growth Strategy on Track
STL Growth Strategy on Track 1 2 3 4 Strong industry STL growth strategy Financials continue Q&A tailwinds continue on track to improve session © 2022-2023 Sterlite Technologies Limited 8
Slide 9: 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 10: 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 11: 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 11
Slide 12: 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 13: 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 14: 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 15: 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 16: 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 17: Digital & Technology Solutions
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 18: 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 19: Robust Financials
Robust Financials 1 2 3 4 Strong industry STL growth strategy Financials continue Q&A tailwinds continue on track to improve session © 2022-2023 Sterlite Technologies Limited 19
Slide 20: 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 21: 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 with a leading North American 5% 4% 8% 3% 1
Slide 22: 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 23: 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 24: 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 25: 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 26: 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 27: Consolidated Financials: Abridged Version
Consolidated Financials: Abridged Version P&L (INR Cr.) Q1 FY23 Q2 FY23 QoQ Balance Sheet (INR Cr.) FY22 H1 FY23 Revenue 1,575 1,768 12% Net Worth 2,047 2,006 (including minority interest) EBITDA 119 202 70% EBITDA % 8% 11% Net Debt2 2,782 3,239 Depreciation 82 82 Total 4,829 5,245 EBIT 37 120 221%
Slide 28: 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 29: 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 30: Lets answer your questions
Lets answer your questions 1 2 3 4 Strong industry STL growth strategy Financials continue Q&A tailwinds continue on track to improve session © 2022-2023 Sterlite Technologies Limited
Slide 31: beyond tomorrow
beyond tomorrow © 2022-2023 Sterlite Technologies Limited 31
Slide 32: Annexure: Key Business risks
Annexure : Key Business risks S.No. Risk Risk Definition Comment Geo Political & Economic Uncertainty in economic (Inflation, increase in interest rate, etc), political 1 Focus on cash generation ; Review and divestments of non core assets Risk conditions may lead to adverse effects. Reduction in Ca
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