Sterlite Technologies Reports Profit Growth but Revenue Decline in Q2 FY26, Order Book Surges

Sterlite Technologies Ltd (STL) announced its financial results for the second quarter of fiscal year 2025-26, reporting a net profit of ₹4 crore, a positive shift from the ₹14 crore net loss recorded in the same period last year. Despite the profit turnaround, the company's revenue from operations saw a marginal decline of 4% year-on-year, falling to ₹1,034 crore from ₹1,074 crore. However, operational efficiency improved, as evidenced by a 10.3% year-on-year increase in Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) to ₹129 crore. This also led to an expansion of the EBITDA margin to 12.5% from 10.9% in the prior year's comparable quarter.

A key highlight is the substantial growth in STL's order book. During the first half of FY26, the order book surged by approximately 135% compared to the same period last year, reaching ₹5,188 crore by the end of the second quarter. The Optical Networking Business (ONB) contributed ₹980 crore in revenue and ₹136 crore in EBITDA during Q2 FY26.

Globally, Sterlite Technologies Digital expanded its reach with three new customer acquisitions, bringing its total to 33 clients, and secured a multi-year deal for its cloud-based client connectivity platform. The company also launched an Artificial Intelligence Center of Excellence (AI CoE) to foster innovation and develop advanced solutions. Strategic partnerships were deepened, including a collaboration with Netomnia for full-fibre networks in the UK and a Long-Term Supply Agreement with a European telecom provider, along with new orders from US operators.

Impact This news signifies a potential turnaround for Sterlite Technologies, with improved profitability and a robust order book suggesting future revenue streams. However, the decline in current revenue warrants attention. The company's focus on innovation, AI, and global expansion positions it for future growth, which could positively impact its stock performance and investor sentiment. The recent stock drop, despite profit, might reflect market concerns about revenue or broader economic factors. The overall impact on the Indian stock market is moderate, primarily affecting STL investors. Rating: 6/10.

Difficult terms explained: Net profit: The profit a company makes after deducting all expenses, taxes, and interest from its total revenue. Revenue from operations: The income generated from the company's primary business activities. EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation): A measure of a company's operating performance, indicating profitability before accounting for financing decisions, accounting decisions, and tax environments. EBITDA margin: The ratio of EBITDA to revenue, showing how efficiently a company generates profit from its sales. Order book: The total value of unexecuted orders a company has secured, indicating future revenue potential. Optical Networking Business (ONB): The segment of the company that deals with the manufacturing and deployment of optical fiber cables and related networking equipment. Artificial Intelligence Center of Excellence (AI CoE): A dedicated unit within an organization focused on advancing AI capabilities, research, and application development. Long-Term Supply Agreement (LTSA): A contract between a buyer and a supplier that specifies the terms and conditions for the supply of goods or services over an extended period.