4 Optical Fibre Stocks to Watch Out amid India's Anti-Dumping Move

Indian companies involved in the optical fibre business heaved a sigh of relief recently after the government came out with the anti-dumping move.

Earlier this month, the Commerce Ministry of India imposed this anti-dumping duty on imports of optical fibres and related goods from China, Indonesia, and Korea.

This move comes at the right time as India is getting a massive digitisation push.

The domestic optical fibre companies expect to get better prices after this move, which was earlier difficult with imports from the above-mentioned countries.

Domestic companies were getting hurt from cheap prices especially due to the imports from China.

The anti-dumping move by the government became more significant as Union Cabinet approved Rs 1.3 trillion (tn) of investments for the upcoming stages of the BharatNet Project.

Joy has been felt across the optical fibre industry, as the share price of companies involved in this space have jumped significantly after these announcements.

Let's take a look at the top companies involved in this space.

#1 Birla Cable

First on the list is Birla Cable.

The company is engaged in the production of a wide range of telecommunication cables. Its product portfolio includes copper cables, fibre optic cables, telecom fibre accessories and speciality cables.

The company has major ties in the industry. One of its prestigious clients is Indian Railways. With the railway sector getting a big boost, there are many potential opportunities that might come Birla Cable's way.

Coming to the financials , the company's net sales have increased consecutively for the past three years. From Rs 2,231 million (m) in FY20, the net sales surged to Rs 5,354 m in FY23.

With these developments in the optical fibre space, revenues are expected to get a boost.

As far as net profit is concerned, the company has managed to go up to Rs 217 m in FY23 from a mere Rs 10 m three years ago.

The share price of Birla Cable hit a 52-week high after the approval of the BharatNet project's investments.

 

Shares of Birla Cable have gained over 85.7% in the past year.

#2 HFCL

Second on the list is Himachal Futuristic Communications Limited (HFCL).

HFCL is one of the leading companies offering a diversified range of optical fibre cables, equipment, and optical fibre.

The company also offer system integration, telecom infrastructure development, and building advanced telecom products and equipment.

HFCL has partnered with Microsoft, Qualcomm, and Wipro for developing high-end 5G products and solutions as well. This year, it is going to launch different new technologies in the 5G space too.

In FY23, around 43% of its revenue came from collaboration with Reliance Jio Infocomm (RJIL).

HCFL is handling the network planning, and implementation of network building in the northern region as a partner of RJIL.

In May 2023, the company closed an Rs 2,219.5 m deal for supplying 700 Mbps and 1 Gbps point-to-point UBRs to RJIL.

The net sales grew from Rs 44,229.6 m in FY21 to Rs. 47433.1 m in FY23. While the PAT surged from Rs 2,462.4 m to Rs 3,177.1 m during the same period.

Coming to the share price performance, HFCL shares have declined around 8.3% in the past one year.

 

HFCL is also developing IBR cable, which is going to be launched in the coming years.

The share price of HFCL jumped on the approval of investments for BharatNet Phase II, as the company is closely associated with the project.

It is working on the implementation of multi-hybrid projects where it is working on setting up GPON radio networks, OFCs, WiFis, and MW networks.

Another interesting factor that has been witnessed regarding HFCL is the increasing number of private customers/ clients.

In FY21, 49% of the revenue used to come from the government, and now, 83% of the revenue comes from private players.

#3 Sterlite Technologies

Sterlite Technologies is third on our list of optical fibre companies to watch out.

With strong optical fibre deployment across the globe, Sterlite is currently the leading business in this industry and globally it is in third position.

Sterlite Technologies is engaged in new product development for Optical connectivity.

The order book of Sterlite is stable with orders worth Rs 70,350 m for the upcoming years by 2025.

Sterlite has collaborated with Facebook to manufacture 5G macro radios as a part of the Evenstar Program. This product will be available globally including India shortly.

Coming to the financials, the company's revenue surged by 26.8% in FY23 while the PAT grew by 57.1%.

The debt-to-equity ratio decreased from 0.8x to 0.5x, which is a major relief to the business.

For FY24, Sterlite Technologies expects revenue to grow between 7% and 9% and debt ratio to come down further.

The share price of Sterlite Technologies grew 3.9% in the past year and the current market capitalisation stands at Rs 61,515.15 m.

 

#4 Vindhya Telelinks

Last on the list is Vindhya Telelinks.

Another MP Birla Group company, Vindhya Telelinks is engaged in a wide range of telecom projects where it offers optical fibre cables, intracity HDD - broadband network, entire infrastructure for setting up towers of telecom companies, EHV cabling, transmission line, and more.

The major clientele of VATL includes telecom companies, power companies, businesses engaged in LED lighting, and gas pipelines.

Vindhya Telelinks' revenue dipped from Rs 1,502.06 m in FY21 to Rs 1,323.95 m in FY22. However, in FY23, the revenue of this company surged to Rs 2,900.11 m.

The share price of Vindhya Telelinks has surged 88.7% in the past one year.

 

Conclusion

Even though optical fibre is domestically manufactured, many Indian companies opt for imported fibre due to the lower cost.

Last month, the central government questioned the Kerala government's approach towards using Chinese optical fibre. It was then announced that anti-dumping duty on the import of optical fibre from these countries would be imposed.

This anti-dumping move is expected to help domestic companies increase their sales and get fair prices in the market.

With the BharatNet project and rural digitalisation projects, there is already huge potential in the optical fibre industry, which got a further boost with this move.

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