X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Sterlite Optical: Digital play - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 19, 2000

    Sterlite Optical: Digital play

    Sterlite Industries Ltd. (SIL) demerged its copper and telecom business with effect from July '00. Subsequently, the copper and telecom business is conducted under Sterlite Industries (India) Ltd. and Sterlite Optical Technologies Ltd. (SOTL) respectively.

    With the demerger every shareholder in SIL was offered a share - face value Rs 5 - in the telecom company SOTL. Further, the management undertook capital reduction in the copper company reducing the face value of the shares from Rs 10 to Rs 5.

    The telecom offshoot, SOTL, has two main businesses; jelly filled telecom cables (JFTC) and optic fibre (OF). The optic fibre operations are integrated, as the company is also present in the downstream optic fibre cable (OFC) business. Currently, OFC consumes 45% of the company's OF production the remaining is sold to cable manufacturers. Internationally, most of the majors sell OFC as the final product and not OF. The manufacturing of OF is a closed-door technology with only 5 players having access to the technology globally.

    The company anticipates to shift its revenue mix in favour of optic fibres. Currently, the mix is 68:32 in favour of JFTC, which is likely to change to 30:70 in favour of optic fibre business. SOTL plans to further expand OFC capacities in order to exploit the demand growth in this sector. The company has said it is open to acquisitions as a strategy to augment capacities and believes that higher capacities will offer cost advantages.

    The company expects global demand of OFC to grow at a compounded rate (CAGR) of 17% till FY04. Meanwhile, the domestic demand is estimated to grow at 41% CAGR for the next two years. Further, in the case of materialization of private sector investments in broadband backbone and last mile connectivity the demand for fibre could foster stronger growth.

    In an attempt to stay ahead of the technology curve the company is investing 12% of its revenues in R&D. SOTL has obtained patents for three of its products and aims to acquire more. Further, the company is also moving towards higher end technologies, which are greater value add, through investments in optical component technology.

    However, most companies have been able to obtain patents through small modifications in technology and to that extent patents do not create significant entry barriers. Further, the demand projections could be suspect with AT&T, the leading telecom company, postponing it purchases of optic fibre equipment. Nevertheless, SOTL is the sole producer of OF in the country and is a chance for riding the digital wave.

     

     

    Equitymaster requests your view! Post a comment on "Sterlite Optical: Digital play". Click here!

      
     

    More Views on News

    Bharti Airtel: A Good Quarterly Performance (Quarterly Results Update - Detailed)

    May 6, 2016

    Bharti Airtel has reported a8.4% YoY growth in the topline and an increase of 2.8% YoY in the bottomline for the quarter ended March 2016.

    Bharti Infratel: Ends the Year Positively (Quarterly Results Update - Detailed)

    Apr 27, 2016

    Bharti Infratel has reported a 7.3% YoY growth in the topline and an increase of 18.7% YoY in the bottomline for the quarter ended March 2016.

    Bharti Infratel: A Good Quarter (Quarterly Results Update - Detailed)

    Apr 8, 2016

    Bharti Infratel has reported a 4.9% YoY growth in the topline and an increase of 11.5% YoY in the bottomline for the quarter ended December 2015.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE TECK


    Aug 16, 2017 (Close)

    COMPARE COMPANY

    MARKET STATS