Brokerage firm Nirmal Bang has initiated coverage on Sterlite Technologies with a Buy rating and a price target of Rs 1,340, projecting a 40% upside. The outlook is supported by strong demand from AI data-centers and a recent $1.2 billion hyperscale order. Investors are focusing on the company's planned margin expansion as it shifts toward higher-value connectivity products.
Brokerage firm Nirmal Bang has initiated coverage on Sterlite Technologies with a Buy rating and a price target of Rs 1,340. This target implies an upside of approximately 40% from the stock's recent trading level of Rs 955. The positive outlook is primarily driven by the company’s role in meeting the global demand for AI-driven data-center infrastructure and the ongoing rollout of 5G and 6G technologies. Sterlite Technologies, which maintains a 9% global market share in optical fiber cables outside of China, is positioning itself as a key supplier for these high-growth sectors.
The brokerage anticipates a significant transformation in the company's profitability. Projections indicate that EBITDA margins could expand from 12.3% in the 2026 fiscal year to 23% by the 2027 fiscal year. This shift is expected to come from a strategic move toward higher-value connectivity products rather than relying solely on standard fiber cabling. This change in product mix allows the company to capture a larger share of the customer's wallet as data centers expand their capacity, which is forecasted to reach 220 gigawatts by 2030.
Investor sentiment has also been supported by the company recently securing a major $1.2 billion agreement with a hyperscale partner, which serves as a foundation for revenue growth. Despite the optimistic outlook, the brokerage acknowledges potential challenges that investors should consider. These include the risk of optical fiber pricing becoming more moderate, the complexities of managing large-scale capacity expansion projects, and the possibility that the ramp-up of new data-center connectivity products might happen slower than currently estimated.
Looking ahead, the primary focus for shareholders will be the execution of these major orders and the actual delivery of improved profit margins. Investors may track whether the company can successfully transition its product mix and maintain the projected margin growth amid competitive pressures in the telecom infrastructure space.