Sterlite Technologies vs HFCL: Which is the Better Data Center Stock?

# HFCL

HFCL, listed for decades as Himachal Futuristic Communications, built its business on telecom equipment supply and government and PSU contracts, including BSNL and defence-linked work.

It carries a patchier long-term record with five-year revenue growth of just 2.27% and a 2021 episode in which the promoter group had to get pledged shares released.

The more recent story is a business mix shift: private-sector customers rose to 84% of FY26 revenue from just 26% in FY24, and exports climbed from a minor contributor to 41% of FY26 revenue and 55.5% of Q1 FY27 revenue, anchored by its own US$ 1.1 bn multi-year optical fiber cable export supply agreement.

HFCL's total order book stood at a record Rs 266.65 bn as of late July 2026, roughly five times FY26 revenue, of which Rs 122.48 bn are confirmed export orders.

In July 2026 its board approved a dedicated Rs 2.15 bn facility for AI data center connectivity solutions, with capacity for 2.7 lakh assemblies a year and commissioning targeted for September 2027, alongside raising optical fiber capacity from 28 to 34 m fibre-km and cable capacity from 34 to 43 m fibre-km.

Unlike Sterlite, HFCL also runs a defence manufacturing arm, small today at Rs 770 m of FY26 revenue but targeted to reach Rs 5-6 bn in FY27.

Comparing Both, Side By Side

# Revenue Growth

HFCL's Q1 FY27 growth rate is higher of the two, but it's also the broader-based number.

It reflects export DC-linked orders landing alongside a recovering domestic telecom capex cycle and defence orders.

STL's 87.4% growth is more directly attributable to its own hyperscaler order ramping, which is exactly why its FY29 target, nicknamed "Lakshya FY29" internally, is so much more aggressive in relative terms. The company is planning to quadruple revenue in three years.

# Profitability

When it comes to profitability, both companies are living through the same structural margin inflection at roughly the same time.

However, HFCL is already turning a profit at a materially larger absolute scale, nearly six times STL's FY26 net profit on revenue that is barely larger.

STL's full-year profit of Rs 560 m is real progress against a company that was still posting quarterly losses nine months earlier, but it is a much thinner base.

Its FY29 target margin of above 27% is meaningfully higher than HFCL's 20-21% goal.

# Debt and Balance Sheet

STL enters this capex-heavy phase with a clean balance sheet, having raised Rs 15 bn through a Qualified Institutions Placement specifically to de-lever, a sensible move given how close the company came to real financial stress in 2023-24.

HFCL, by contrast, is funding its roughly Rs 6.4 bn of FY27 capex, including the new AI data center connectivity facility, off its own operating cash flow and existing borrowings.

Neither position is a red flag today given the cash both companies are generating.

# Growth Roadmaps

Both companies used their September 2026 investor presentation to lay out explicit three-year targets.

STL's roadmap is the more aggressive of the two on every metric that matters, higher revenue multiple, higher margin target, heavier annual capex relative to its current size.

That is precisely the case for owning it if the AI data center fiber cycle keeps accelerating.

HFCL or Sterlite Technologies: Which is the Better Data Center Stock?

STL is the purer AI data center bet of the two, with the more headline-grabbing hyperscaler contract, the deepest vertical integration from glass to finished cable, and has the more ambitious FY29 target.

HFCL offers the same underlying theme, a genuine, verified US$ 1.1 bn export order and a dedicated AI data center connectivity facility of its own, at a lower relative growth ambition but against an already larger and more diversified profit base.

It also has an emerging defence manufacturing arm that STL does not have.

As always, investors should evaluate the company's fundamentals, corporate governance, and valuations before drawing any investment conclusions.

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