STL Q4 FY26: Order Momentum Builds as AI Data Centres Come Into Focus

Sterlite Technologies Limited ended FY26 with a strong Q4 print and a clear strategic message: fibre remains central to the next wave of digital infrastructure, and AI data centres are turning into a structurally larger demand driver. For Q4 FY26, revenue from continued operations came in at INR 1,441 crore, up from INR 1,052 crore in Q4 FY25. EBITDA for the quarter was INR 218 crore with a 15.1% margin, and PAT from continued operations stood at INR 59 crore.

For the full year FY26, STL reported revenue from continued operations of INR 4,745 crore (FY25: INR 3,996 crore). EBITDA rose to INR 628 crore and margins expanded to 13.2% (FY25: 11.3%). PAT from continued operations turned positive at INR 56 crore compared with a loss of INR 72 crore in FY25.

The numbers matter, but the bigger anchor for the narrative was demand visibility. FY26 order intake more than doubled to INR 7,687 crore, and the open order book rose to INR 7,309 crore. Management attributed the momentum to large data centre wins, primarily in North America, along with a long-term order from a Tier-1 Indian telecom operator.

A year where order momentum became the headline

STL’s FY26 results were accompanied by unusually strong order indicators for an optical fibre and cable player, especially after a period when tariffs and supply constraints had been meaningful talking points.

Order intake increased from INR 3,672 crore in FY25 to INR 7,687 crore in FY26. The open order book increased from INR 4,378 crore to INR 7,309 crore. The company also shared the execution phasing: INR 1,468 crore scheduled for Q1 FY27, with INR 5,841 crore scheduled for Q2 FY27 and beyond.

Management repeatedly positioned the company around long-term customer relationships rather than spot-market selling. In the Q&A, the Managing Director said STL does not play in the spot market and instead focuses on long-term contracts and co-development with select customers.

Financial summary

The company also disclosed leverage metrics. Net debt stood at INR 1,128 crore, with net debt to equity at 0.5x and net debt to EBITDA at 1.3x. The FY27 target shared in the deck was net debt to EBITDA below 1.2x. A footnote stated that the net debt figure excludes INR 372 crore of restricted cash allocated for a legal matter related to the U.S. entity.

Mix trends: Americas up, connectivity attach down

STL’s FY26 revenue mix shifted geographically, with the Americas becoming a larger contributor. The Americas share rose to 39% in FY26 from 25% in FY25, while Europe declined to 39% from 47%. RoW declined to 22% from 28%.

On segment mix, Telecom and Citizen Networks remained dominant at 81% of FY26 revenue (FY25: 79%). Enterprise and Data Centre was 19% (FY25: 21%). Management attributed part of the moderation in the Enterprise and Data Centre share to weakness in the copper business, linked to higher LME prices.

A key operating metric that softened was the optical connectivity attach rate, defined as optical connectivity revenue divided by OFC revenue. The attach rate reduced to 15% in FY26 from 22% in FY25. Management described this as mix and project timing, along with sharp acceleration in OFC revenues, and maintained that the long-term attach opportunity remains intact.

Strategy: positioning for the AI data centre cycle

The presentation repeatedly argued that three investment cycles are overlapping: FTTx, data centres, and 5G. The company highlighted data centre expansion as the fastest-growing driver for fibre demand and framed AI as a step-change in fibre intensity, especially for intra-data centre cabling and data centre interconnect.

In Q4 FY26, STL launched Neuralis, an AI-era data centre connectivity portfolio, in the U.S. It is positioned around two use-cases: AI whitespace internal connectivity and high-speed DCI external connectivity. The deck highlighted products such as pre-terminated fibre trunks, high-density assemblies, and Celesta IBR cables up to 6,912 fibres.

The company also highlighted a set of next-generation fibre platforms and proof points.

Hollow Core Fibre cable was launched and described as enabling materially lower latency, with the deck citing about 30% to 47% lower latency and management commentary citing about 35% to 40% latency reduction expectation. G.654.E fibre was positioned for long-haul and high-capacity networks, with the company stating it received its first commercial order.

Multi-Core Fibre was highlighted as a platform for quantum-safe and multi-terabit networks, with proof points including India’s first QKD over MCF and a testbed at IIT Madras, along with a trial with Colt in the UK.

These product launches are strategically coherent with the demand narrative, but management did not quantify revenue contribution from hyperscalers or specific AI data centre customers. In Q&A, the Managing Director said the company does not break out data centre contribution separately and declined to comment on capacity.

Margins: improving operationally, but costs still a moving target

The company provided a margin bridge that separated operational EBITDA and U.S. tariff impact, showing operational EBITDA percent improving over the last six quarters. It also stated that tariffs moderated from peak levels of around 50% to about 18% following a U.S.-India trade arrangement, then transitioned to a temporary 10% to 15% tariff regime.

In the Q&A, the CFO stated that the reduction in tariffs should have a positive impact in Q1, though he also highlighted an offsetting pressure from rising costs due to geopolitical disruption in West Asia, impacting helium and polymer inputs.

Notably, the CFO also stated two forward-looking targets on the call: the company expects Enterprise and Data Centre to scale to 30% of revenues in the current fiscal, and it targets 20% EBITDA margin at reported level by the end of the current fiscal. These are management aspirations rather than formally guided ranges, but they are explicit statements.

Balance sheet and capital allocation signals

Management described the QIP approval as an enabling resolution taken annually, rather than an immediate fund-raise plan. However, it did indicate a near-term capex intent: approximately INR 500 crore to upgrade the asset base to support high-value data centre portfolio offerings.

On legal matters, management stated it filed an appeal in September 2025 in the Prysmian litigation and believes it has a strong case. It also stated there are additional appeal steps available if required.

In response to questions on potential tariff refunds, management said a process has started in the U.S. for repayment of tariff to the importer on record, but timelines and amounts were not provided. It said the tariff paid was broadly north of INR 100 crore.

Takeaways

FY26 was a year where STL combined a stronger Q4, improving margins, and a meaningful jump in order intake and order book, with a strategy that is increasingly framed around AI data centres. The company’s technology narrative is supported by multiple launches and a large patent portfolio, while the financial narrative is supported by improved profitability and moderated leverage.

At the same time, several factors remain live variables: raw material availability constraints, tariff dynamics, cost inflation in key inputs, and an ongoing legal matter linked to the U.S. entity. The near-term test for FY27 will be whether the order book converts smoothly into revenue, and whether the company can lift connectivity attach rates while scaling the data centre mix it is targeting.