2 hrs ago
Nomura Sees 35% Upside in Sterlite Technologies
Nomura, a financial company, has started following Sterlite Technologies’ stock.
It says the stock could rise to Rs 1,350, about 35% above its Monday closing price.
Nomura expects demand for optical fibre cables to keep growing, especially in North America and Europe.
These cables help connect data centres and other networks.
The company plans to spend Rs 3,000 crore to make more cables and related products.
Nomura thinks data-centre business could become a much bigger part of the company’s sales.
It expects the company’s revenue and profits to grow quickly.
But its outlook could be hurt if data-centre spending slows or new industry capacity comes online faster than expected.
Nomura initiated coverage of Sterlite Technologies with a Buy rating and a target price of Rs 1,350 per share.
The target implies nearly 35% upside from Monday’s closing price of Rs 1,001.25.
Nomura expects optical fibre cable demand in North America and Europe to grow at a 14% CAGR from 2025 to 2030.
Sterlite Technologies plans to invest Rs 3,000 crore over three years to expand capacity by 50%.
Nomura forecasts strong revenue and EBITDA growth, while citing slower AI data-centre spending and capacity expansion as risks.
- Who
- Nomura and Sterlite Technologies.
- What
- Nomura initiated coverage with a Buy rating and a Rs 1,350 target price for Sterlite Technologies.
- Where
- The demand outlook focuses on North America and Europe, key markets for Sterlite Technologies.
- When
- The article reports the initiation; its target comparison uses Monday’s closing price.
- Why
- Nomura expects sustained optical fibre cable demand, driven in part by data-centre investment and constrained supply.
Nomura’s bullish case
Risks to the outlook
Optical fibre cable demand
Nomura’s bullish case
Nomura expects demand to remain strong beyond 2030, supported by data-centre investment and a supply deficit.
Risks to the outlook
Slower capital expenditure on AI-led data centres could weaken demand and undermine the growth outlook.
Supply and market opportunity
Nomura’s bullish case
Nomura says Sterlite Technologies’ integrated manufacturing and existing hyperscaler contracts may help it gain share as competitors face preform supply bottlenecks.
Risks to the outlook
Faster-than-expected commissioning of industry capacity could ease supply constraints and reduce the opportunity.
Company execution
Nomura’s bullish case
Nomura expects capacity expansion and higher-margin data-centre orders to support rapid revenue and EBITDA growth.
Risks to the outlook
Weaker optical infrastructure, execution challenges, and cash outgo from legal claims are identified as risks.
Key facts
- Nomura rating
- Buy
- Target price
- Rs 1,350 per share
- Reference closing price
- Rs 1,001.25 per share on Monday
- Implied upside
- Nearly 35%
- OFC demand forecast
- 14% CAGR in North America and Europe from 2025 to 2030
- Planned investment
- Rs 3,000 crore over three years to expand capacity by 50%
- Revenue forecast
- Nomura expects 50% CAGR from FY26 to FY29
- Key risks
- Slower AI data-centre capital expenditure, faster industry capacity commissioning, weaker optical infrastructure, execution challenges, and cash outgo from legal claims
Quotes
Nomura
Brokerage that initiated coverage of Sterlite Technologies.
“The company has a 9% share in the ex-China global OFC market (1Q1FY27) and its DC (data centre) market share, (low-single digits currently) can increase towards high single-digits, in our view, due to its superior product portfolio, established relation with hyperscalers and extensive industry experience.”
financialexpress.com
“However, constrained supply due to limited glass preform capacity, raw material bottlenecks, and limited ex-China capacity have created a persistent deficit, forcing hyperscalers into multi-year supply agreements and opening opportunities for players such as STL.”
financialexpress.com
Sources
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