Sterlite's margin rebounds, but other income drives the profit turnaround
Standalone revenue growth outpaced expenses, lifting operating margin 6.02 percentage points sequentially, while other income exceeded pre-tax profit.
Filed 06 May 2026, 12:56 IST · Sterlite Technologies Ltd (STLTECH)
Key takeaways
- Standalone operating margin recovered 6.02 percentage points sequentially to 8.38% as revenue grew 27.03%, faster than expenses at 19.2%.
- Standalone net profit turned positive at Rs 33 cr from a loss of Rs 31 cr sequentially, but other income equalled 144% of pre-tax profit.
- The stock rose 4.59% after the result, despite gains occurring in only 2 of its 8 recent result reactions.
Price around the results
Revenue growth restored operating leverage
Standalone revenue rose 27.03% sequentially and 35.5% year on year, while expenses grew 19.2% and 30%, respectively. That gap lifted operating margin by 6.02 percentage points sequentially and 3.88 percentage points year on year. The margin recovery follows a decline from 7.56% in Q1FY26 to 6.26% in Q2FY26 and 2.36% in Q3FY26.
Profit quality remains weaker than the headline
Net profit improved to Rs 33 cr from a loss of Rs 31 cr sequentially and a loss of Rs 25 cr year on year, but other income was Rs 72 cr against pre-tax profit of Rs 50 cr. This means other income contributed 144% of pre-tax profit, making the reported turnaround less dependent on operating profit than the margin recovery suggests. The year-on-year comparison was also helped by a 23.89-percentage-point fall in the tax rate, while interest expense rose 7.5% sequentially.
STL remains below the reported peer margin
STL's standalone operating margin of 8.38% was 11.21 percentage points below the 19.59% median for seven Telecommunication peers that had reported the quarter. The company ranked second from the bottom on this measure. The sequential rebound therefore came from a low Q3FY26 base rather than a return to the sector median.
Presentation points to optical-fibre and data-centre demand
The presentation says India optical-cable demand is projected to grow at approximately 11% CAGR from 2025 to 2030, while North America is projected to grow at 15% CAGR through 2030. It also flags data-centre investments of $15 billion in Vizag and $17.5 billion in India by global technology and cloud companies. STL said it expanded its HD microcable range with a 432F, 200-micron cable and added the NanODC closure with splice capacity of up to 24 fibres.
The market reaction was positive but not unusual in size
The stock gained 4.59% on the reaction date, with volume at 2.23 times its reference level, and its relative return was 3.83%. The move was below the 5.27% median absolute move across the eight recent result reactions, although the historical direction was usually negative, with six declines and two gains. The stock's subsequent 5-day return was 25.57%.
Q4FY26 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹752 cr | ₹592 cr | +27.03% | +35.50% |
| Other income | ₹72 cr | ₹20 cr | +260.00% | +84.62% |
| Expenses | ₹689 cr | ₹578 cr | +19.20% | +30.00% |
| Operating profit | ₹63 cr | ₹14 cr | +350.00% | +152.00% |
| Operating margin (%) | 8.38% | 2.36% | — | — |
| Interest | ₹43 cr | ₹40 cr | +7.50% | +2.38% |
| Depreciation | ₹42 cr | ₹41 cr | +2.44% | +2.44% |
| Profit before tax | ₹50 cr | ₹-47 cr | — | — |
| Tax | ₹17 cr | ₹-16 cr | — | — |
| Net profit | ₹33 cr | ₹-31 cr | — | — |
| EPS (₹) | ₹0.68 | ₹-0.65 | — | — |
Operating margin of 8.38% compares with a Telecommunication sector median of 19.59% across 7 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +4.59% | +3.83% |
| Next session | +3.39% | — |
| 5 sessions | +25.57% | +24.20% |
| 15 sessions | +47.35% | — |
| 30 sessions | +104.70% | — |
Volume on the results session was 2.23× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- India optical cable demand is projected to grow at approximately 11% CAGR from 2025 to 2030.
- North America is expected to lead demand growth, with a projected 15% CAGR through 2030.
Expansion
- A global technology and search company is investing $15 billion in a Vizag data centre.
- A global software and cloud leader is allocating $17.5 billion for an India data centre buildout.
New initiatives
- STL expanded its HD microcable portfolio with a 432F, 200-micron fibre cable.
- STL added the NanODC compact closure with splice capacity of up to 24 fibres.
Competition
- STL's global ex-China optical fibre cable market share is described as stable.
What to watch
- Whether standalone operating margin holds above 8.38% after the Q4FY26 rebound.
- Whether other income remains below its current 144% share of pre-tax profit.
- Whether interest expense moves back below Rs 43 cr after rising 7.5% sequentially.