Sterlite Technologies Limited — Q1 FY27 earnings call

Got it. Another question I had with respect to the sourcing of raw material, particularly the rare earth materials. If you could talk a little bit where are we in that journey? Have we got the visibility for next few years, few quarters, if you could clarify on that as well?

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Yes. So I think there are 3 or 4 elements out here. One is germanium, which is used in our glass process. We have helium, which is required as part of some of our fiber manufacturing. And then we have other elements like polyethylene and others, which are linked to oil prices, etc. From the areas we've been speaking about, I would say, germanium, we continue to put consistent efforts both on looking at the areas of sourcing, and we continue to believe that, that will improve quarter-on-quarter. At the same time, we're also looking at new technologies where our consumption of germanium itself could reduce over time. So that's something that's work in progress over the next few quarters. We'll update on that. And when it comes to helium as well, we are watching that very closely with the developments in Middle East. But we have worked on some technologies. We were able to recycle some of our requirements and from that perspective, we are well positioned. Sterlite Technologies Limited July 24, 2026 Page 10 of 18 And from a polyethylene perspective, yes, the prices have been fluctuating. Largely, that ultimately is a cost for us at the cable level, and we feel fairly confident that up to a certain level that we are able to pass that on to our customers. So overall, I would say, work in progress, and we do feel confident quarter-on-quarter, it will improve.

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Got it. And just the last question on the capex...

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Sorry to interrupt Mr. Achal, we request you to join the question queue again for a follow-up question as there are other several participants. The next question is from the line of Devavrat from Seven Rivers Holding.

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Ankit. Congratulations on a great set of numbers. You haven't shared the capacity utilization numbers, but I'm just curious to know that given the quantum of capex in AI data centers, do you think we will have the capacity to take on a couple of more large orders if given the opportunity? And if not, then are we looking at any capacity additions over the next couple of quarters? That would be all from my side?

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Dave, as I said, I think we're in several conversations in terms of conversations with telecom operators in India, in Europe as well as globally. At the same time, we are looking very closely at both upgrades of our equipment and machines, and we're also looking at debottlenecking from our current operations. So all of that is progressing as we would like. And both things are happening in parallel, Dave. So we are in the conversation as well as well as we feel confident that with some of the upgrades as well as debottlenecking, we can look at further orders from here.

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The next question is from the line of Sunil Jain from Nirmal Bang Securities.

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Congratulations on good number. My question relate to the executions which you had said will be done in the Q2. If we see last quarter, you said you will be doing something around INR1,500 crores but the execution has happened much larger. So similar trend can happen in the coming period also. And the execution for the whole year, if you can indicate anything on that, like you had given guidance for the margin, if anything you can indicate on the revenue?

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So broadly, we don't give any guidance on the revenue. The numbers which you are talking about is the order book, which was supposed to be executed in Q1 when we talked previously. Since then, there has been drastic improvement in the order intake, which is clearly visible on the revenue growth, which you have seen. On the Q2 number, similarly, we are reporting that the executable order book is INR2,228 crores, but that does not give any guidance on the revenue number.

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Okay. And sir, second thing, if you can talk about the order pipeline, if you can indicate anything in negotiations and all?

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So, as I said, that we are in -- look, historically, we've always been focused on having key accounts globally, both on telecom side and data center. That's our strategy. We're not focused Sterlite Technologies Limited July 24, 2026 Page 11 of 18 on the spot market, whether it is fiber or cable. We have very strong partnerships with customers in India. We have BharatNet projects and others, which are very important to us. So we continue to have very good discussions with our customers. We continue to work on our product development for their future requirements as well as particularly with telecom customers and data center customers, we are looking and in discussions for their orders and their requirements for the coming years. So that's all happening in parallel.

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The next question is from the line of Tej Patel from Niveshaay.

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Congratulations on a very great set of numbers. So a couple of questions, sir. First question on - - just wanted to understand your view on -- if I look at the gross margins, they have somewhat stayed same, right, despite our mix from DC going, let's say, up compared to the last quarter. Just wanted to get your view on this. I mean, considering, let's say, DC would be having a higher margin at the gross level, are we facing -- I mean, is it because of cost pressure at the raw material that got probably led to, let's say, same margin? Otherwise, probably would the margins have been higher? And given, let's say, we are targeting a higher proportion of share in DC to up to 30% on a yearly basis, I just wanted to get your view on gross margins moving forward as the mix towards DC shifts?

Got it. Got it. Perfect. Sir, second question is, I mean, of course, there's been a record inflow of orders this quarter. But let's say, if I remove our long-term order of $1 billion, I mean, we have a decent order intake. Just wanted to understand, I mean, if I remove that order, the inflow will be about, let's say, INR3,000 crores, which was, let's say, last quarter around INR7,000 crores to INR8,000 crores the regular business. Was it a conscious decision on not, let's say, taking incremental business because of, let's say, capacity constraint and probably we'll start looking to take more orders, the regular orders once there's some debottlenecking, is it a conscious choice or was it a regular order intake?

Got it. Got it. And sir, on germanium, just wanted to understand, are we currently buying, I mean, whole of the inventory on spot or we have some tied up contracts, which are, let's say, at a lower fixed price? Sterlite Technologies Limited July 24, 2026 Page 12 of 18

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We can't comment a lot on the germanium for competitive reasons. But we are -- as I've been sharing, we are clearly focused on looking at our sources and diversifying our sources. And we feel confident about improving our availability quarter-on-quarter.

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Got it. Got it. And sir, last question on -- I mean, after this debottlenecking and you are saying that there's continuous capex, which is happening. Just wanted to get your view on -- are we still looking for, let's say, once we have a decent capacity on board, are we still looking for, let's say, in negotiations for a long-term order of, let's say, not of this size, but let's say, a sizable order for -- with some telcos or data centers going forward in this financial year?

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I mean I can't comment on any specific size. But as I said, we are -- this is all happening in parallel. We are doing the debottlenecking and upgrades of our capabilities across glass fiber, cable and connectivity. So all of that's happening in parallel. At the same time, we are in conversations with our current customers as well as some new customers in terms of their requirements.

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Great, sir. And if you could help us with the capex....

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Sorry to interrupt, Mr. Tej. May we request you to join the question queue for your follow-up question. The next question is from the line of Krish Mehta from Enam Holdings.

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Ankit, my question was mainly -- it's more of a strategic question on how you view this entire AI versus telecom mix for the business. So given the excitement around AI and there's obvious supply crunch in the industry, right, from a more long-term capacity standpoint, how do you think of the order book kind of from filling it more towards the traditional telecom customers where maybe the margin is low initially, but it gives us more long-term stability on the book versus your AI capacity, right, in terms of your capacity and order book. If you could provide some clarity on how you're thinking about this long term?

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Yes, absolutely. I think that's absolutely spot on. I would almost add one more element to that is effectively rural connectivity projects. So we have 3 or 4 parallel demand centers. One has been the historical telecom requirements, which also are continuing to grow in certain pockets and certainly in the U.S. Then you've got the data center part, which we're all aware of, and that's continuing to grow both from the hyperscalers as well as Neoclouds. And in fact, there is a middle ground between the 2 where the telecom operators or neutral fiber companies are also deploying long-haul fiber networks to ultimately serve or lease to the data centers. So they're interconnected in some way. And then you've got this third element of rural projects like BEAD, which is starting to kick off now in the U.S., which is 5 to 7-year build-out. And then you've got BharatNet in India, which is also a large 3- to 4-year build-out at least. So we are very conscious of -- we are in this business to be long term. We stated our ambitions to be top 3 in the world. And with that, we are very clear that we want to have this balance of our customer base and our portfolio base. Sterlite Technologies Limited July 24, 2026 Page 13 of 18 So we're very conscious of that. What we broadly see is that our data center and enterprise segment will go towards 50% overall. And probably we will have telecom and the rural connectivity projects like BharatNet and others as a balance.

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And sorry, just a follow-up on that. So say, over the next 3 to 5 years, do you see this mix of 50% remaining constant or do you think that as the size kind of goes up, it will automatically adjust back down?

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No, I think -- look, it's -- I think strategically, this is where we want to go. Of course, it can vary quarter-to-quarter. But directionally, this is where we think is a good mix. I think we also need to be mindful that we are also looking to scale up our connectivity part in this. So both on the telecom side as well as on the data center side. We're continuously launching new products like the CONCAT and others that I spoke about, where we can improve our attach rate, and we're talking about by quarter 4 of this year, getting to about 25%. So whether it's on the cable capacity or on the connectivity, we are planning and doing our product development to serve all these markets.

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The next question is from the line of Balasubramanian from Arihant Capital.

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Sir, on the data center side, what is our current revenue share in Q1? And secondly, I looked at page number 11 on the PPT. Earlier we had developed a Celesta up to 6,912 fibers per rack, but it's mentioned 12,000 fiber stacks, which are around 72 GPU AI node that is having developed or it's under development, and we are targeting 16,000 fibers also. And if you could share on the realization point of view or not at the company level, but at the industry level, how that price have been moved out. I think earlier it's between $18 to $30 range. So I'm trying to understand, based on the complexities and based on the applications, how that realization have moved up on the industry level?

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Thank you. So firstly, I think on the realization, we do not comment on the realization. Broadly, we do have a healthy mix of good realization from data center as well as the telecom side. So that's something that we continue to have a mix of both types of customers. On the question that you mentioned on the -- so I just want to clarify from a technical perspective, this is not reflective of the fiber, the cable itself, the fiber per switch. So it's just kind of trying to help you understand that as you move towards different GPU architecture, what is the amount of fibers per switch required. And as you see that scale up, it's more just to help you understand that as the density increases by nature of the work happening with NVIDIA and others, the amount of fiber per data center will continue to increase. So that's more just from an information perspective. And similarly, on the left side, when you look at fiber explosion in DCI, which is the data center interconnect, as you see more and more buildings or data center buildings per campus increase, you will see an exponential increase in the fiber for the data center interconnect. So that's just the messaging of both of these that we wanted to share. Sterlite Technologies Limited July 24, 2026 Page 14 of 18

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The next question is from the line of Akshat Mehta from Seven Rivers Holding.

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Congratulations on a fantastic set of results, and thank you for the opportunity. I have a couple of questions. So this quarter 1 performance that you're seeing that INR1,900 crores almost funded by EBITDA...

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No, you cannot audible properly, Akshat.

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Sir, my question was that the Q1 performance that we've seen in terms of revenue and profitability, I mean, can we take -- is it sustainable over the course of the rest of the year?

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Yes. We're not -- we don't guide any numbers for the full year or longer term. What we've been -- I can only reiterate what we've been guiding is that we do expect that our utilization levels will continue to improve. We do -- we are in conversations and active discussions with customers to secure more orders. And we are continuing to invest in both our capacities through debottlenecking as well as through some of our product development. So from our perspective, I think we are well placed to grow, but we cannot give any specific guidance in terms of how much we'll grow from here.

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Okay. Also, I just want to understand what is the kind of capex that we're going to do this year and probably next year?

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Yes. So broadly, what we see is that as a combination of our investments to upgrade all our equipment that I spoke about across glass, fiber, cable and connectivity as well as for our debottlenecking across our sites to improve our yields and output. We expect about INR500 crores of investment per year for the next 3 years. So cumulatively, around INR1,500 crores is what we see over the 3 years.

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Can you also share like the breakup of revenue and EBITDA that you used to for the optical connectivity and cable business?

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No, we don't break that out.

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The next question is from the line of Tushar from Sanghvi Family Office.

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Congratulations on a great execution. My first question was on the optical connectivity product. I just wanted to understand are we into the manufacturing of the optical transceivers? And if not, whether we plan to enter into that space? And how do you assess the product offerings that we have under optical connectivity versus the optical transceivers? A quick primer or explanation on this would be very helpful. And my second question was on the margins. I see we have actually upgraded our margins. Is it on the back of the increase in the pricing that we are seeing or because we are seeing the -- we have guided for the increased optical connectivity attach rate, that's why an upgrade to the margins? Sterlite Technologies Limited July 24, 2026 Page 15 of 18

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Yes. I think there is some history here. We actually used to be in multiple businesses, including active components and many other things. We've consciously chosen to exit, sell off or shut down many businesses. So -- and we've also demerged our system integration business into a separate entity. So there's a very conscious choice to be very, very focused on the optical fiber cable connectivity side. And that's where we are making sure that we're building the right product portfolio. So that's really our focus. We're not looking at the transceiver side or any other technologies. Anything that's linked to our fiber optics, things like hollow-core, multi-core, any of those elements or new types of fiber, those are all within our domain. But new products like transceivers is not something that we're looking at currently. And in terms of the upgrade or to the margins, I think it's a combination of 2, 3 things. I think it is certainly some amount of improvement in our capacity utilization, a good product mix and customer mix as well as from a product side, a good healthy ratio of cable and connectivity together.

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The next question is from the line of Anshul Seghal from Seghal Capital Advisors.

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Great set of numbers. Congratulations on that. Two questions. One, do we have a play in the semiconductor value chain at all, whether now or in the future? And the second is you've spoken a lot about the American data center opportunity. Can you speak a little bit about the Chinese opportunity or rather the investment in data centers in China? Why I ask that question is because we hear that the cost of tokens, etc., is being reduced materially by Chinese players. Now does that mean that it deflates this whole capex environment or that really is not the case at the moment?

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Anshul, thank you for the inputs. I think in terms of the investments, yes, clearly, data center growth is the strongest in the U.S. We are also seeing some very large investment announcements by the government and by the private sector in China that I think you touched on as well. And from our perspective, I think definitely, we see 2 or 3 areas that we are looking at. Our first focus continues to be the data center demand in the U.S. I think India, as we also touched on in our slides, is just at a starting point and will start to grow. So we're excited about how we can really enable this AI infrastructure in India, both on long-haul fiber, metro fiber as well as fiber optics within the data center. So I think that's the area we're focusing. I think Europe does need to step up. There are some initial investments that are starting to happen and some announcements. But I think the progress and speed on the ground is still slow. So I think Europe will probably be a dark horse and will start scaling up in a year or 2. In terms of your point on overall the tokens, I think that is something that's really on everyday basis, that's something worth watching out for. But our macro thesis continues to be that the Sterlite Technologies Limited July 24, 2026 Page 16 of 18 sheer demand when you look at the cloud revenues of all the hyperscalers, that continues to accelerate quite strongly. And even some of the new players like Meta and Oracle are talking about increasing and preparing their data centers for third-party sales. So it does seem to be that the demand is outstripping supply currently. But I agree with you that the price points will have to become more efficient and this large delta in cost of tokens between the U.S. cloud providers and China, there has to be something that has to give at some level. But from a sheer capex spend in the U.S., we continue to be optimistic about that. And we continue to build our product portfolio to help serve them and help them build this out faster than ever before. So that's what we are working on. On your question on the semiconductor, again, as I said, that's not really our top priority right now. We're very focused on the opportunities that we see within the telecom and data center space. We do have very strong glass capability, and we'll continue to evaluate whether we can utilize some of that glass capability for some of the semiconductor requirements, but that's not immediately a priority right now.

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The next question is from the line of Pratiti Khara from Param Capital.

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Yes. I just wanted to check on the $100 million capex that was announced for the U.S. plant in May. What's the capex phasing like and expected commission time line?

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Yes. Thank you. So what we announced was a $100 million investment over a 5-year period. This was as part of our strategy, both to ensure that we have a good balance of cable and connectivity onshore in the U.S., primarily to help certain customers and be able to serve them with a quicker turnaround. The second reason we're doing that is to be more closely aligned and customize our products for their requirements and to also be able to serve them for their future requirements. So this is something that we continue to have conversations with our customers, particularly on the data center side. And as we progress and as we get more clarity from our customers in terms of the requirements, we'll probably update you by next quarter in terms of progress on that.

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Do we have any capacity number in mind what we plan to do there?

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So this is mainly be for the connectivity side. So it doesn't really translate into a capacity per se. But as I said, this will be a connectivity facility that we are planning, both for the telecom segment and the data center segment. So once we're able to finalize and detail out the investment and the scale out of that investment, then we'll be able to share that.

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The next question is from the line of Nova from Nova Financial.

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So my question was about -- you mentioned germanium and helium content. So if it continues through FY27, so it will affect your order book or on any margin? Or do you have any other suppliers or technology to overcome this? Sterlite Technologies Limited July 24, 2026 Page 17 of 18

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Yes, yes. So I think what I shared earlier as well that we are actively working to diversify our suppliers across our raw materials, whether it's germanium, helium or others. There have been cost increases that Ajay spoke about in terms of our input costs. But we are very mindful and looking at improving our supply quarter-on-quarter. And as I shared, we feel confident about that. And at the same time, we are taking in orders from our customers, both on telecom and data center side on BharatNet side, keeping in mind the availability of our raw materials.

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The next question is from the line of Naman Parmar from Niveshaay Investments.

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So firstly, I wanted to understand what will be your debt level and the working capital for the year end of the FY27 after this QIP?

Okay. Got it. Secondly, if you can help us in the understanding on the margin perspective, like you mentioned that you are working very aggressively on reducing the consumption of the germanium, which will help you in increasing in the gross margin going forward if the germanium cost reduces or remains stable at this price. So if you can explain how maximum the margin can help you in the gross level? And also on the EBITDA, if you can bifurcate between telecom versus data center, what is the margin difference?

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We don't normally call out the margin difference. But what we have shared in the past is that, yes, the margins broadly for the solutions we sell to data center are higher margins than the telecom segment. And I think from a cost input perspective, I do want to call out that while the costs are higher right now, I think for us, our focus is to ensure that we are able to utilize our facilities and just through utilization of our factories, we'll be able to have better EBITDA margins being realized. And then on top of that, as we increase our connectivity attach rate, which we shared, going up to 25% by quarter 4, that will further enable our EBITDA margin to increase. So these are the 2, 3 things why we feel confident that the margins will move towards the 23% that Ajay spoke about.

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Thank you. With this, we conclude our call. I would now like to hand the conference over to Mr. Rahul for his closing comments. Over to you, sir.

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Thank you, everyone, for taking time to hear us today. We truly believe STL is well positioned to play a pivotal role in building the digital infrastructure of the future. And we remain available to take any of your follow-up questions. You may reach out to us at official email Sterlite Technologies Limited July 24, 2026 Page 18 of 18 investor@stl.tech. Once again, thank you, and we remain grateful for your continued support. Thank you.

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Thank you. On behalf of Sterlite Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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