Sterlite Technologies posts record Q2 as AI data centre fibre orders surge

Sterlite Technologies, the optical fibre and cable maker known as STL, reported record results for the July to September 2026 quarter on Friday, October 23, 2026, with revenue up about 145% year on year to Rs 2,529 crore and net profit of Rs 517 crore against about Rs 4 crore a year earlier. The company said large multi-year agreements with hyperscalers, the giant cloud and data centre operators, and with telecom operators drove orders and execution. The Sterlite Technologies share has been among the most searched stocks since, and on Monday, October 26, four brokerages were reported to have kept positive views on it.

STL's quarter is a clear example of how spending on artificial intelligence is reaching Indian manufacturers far from the chip and software businesses that usually get attention. AI data centres need dense networks of optical fibre to move huge volumes of data between servers, racks and buildings. As hyperscalers build new capacity, they are signing long supply deals for cables and connectivity products, and STL is one of the few non-Chinese suppliers with scale in that market.

The biggest of these deals was announced on October 1, 2026, when a wholly owned STL subsidiary signed a supply agreement with an unnamed international hyperscaler with an estimated value of about $1.2 billion, roughly Rs 11,500 crore. It covers optical connectivity products made to the customer's specifications, with yearly allocations from 2026 to 2030 and purchase orders released periodically. A separate contract of about $288 million for high-density optical fibre cables runs from 2027 to 2029. Revenue from such agreements depends on purchase orders actually being placed, so the headline value is an estimate rather than a guaranteed sum.

For investors, the quality of earnings matters as much as the size. The Rs 161 crore tariff refund will not repeat, which is why the company and analysts point to operating EBITDA of Rs 685 crore as the better guide to the underlying business. A 27.1% operating margin is already close to the company's earlier FY29 target, which helps explain why management has now raised that goal above 30%. Commentary after the results also flagged higher interest costs linked to loan prepayments and the challenge of executing a large order book over many quarters.

The share's reaction has been mixed. On results day it swung sharply, rebounding about 10% from its intraday low. A report on Monday said four brokerages, including CLSA and Nomura, had kept positive ratings, citing the hyperscaler order book. The stock has risen about 585% over the past year.

Short-term: The record order book gives STL visibility of revenue for several years, but the share is likely to stay volatile as investors weigh one-time gains, interest costs and the pace at which hyperscalers place purchase orders.

Long-term: If AI data centre spending holds up, Indian suppliers of fibre, cables and connectivity hardware could win a larger share of global contracts, especially as buyers look for alternatives to Chinese producers. A slowdown in AI investment would be the main risk to that outlook, since a large part of STL's growth now depends on a small number of very large customers.

Who is affected: STL shareholders; Indian optical fibre and cable makers competing for data centre work; telecom operators and neutral fibre network providers that buy STL products; and workers at its plants.

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