Market downturn is temporary, says Agarwal
STL Managing Director Ankit Agarwal says that 5G or Generative AI, one technology trend after the other is reaffirming the strategic role of optical fibre in networks.
STL is also taking a long-term view amidst ongoing market conditions by continuing to aggressively drive business fundamentals of deep customer engagement, product innovation and sustainability.
“Engagement and sales momentum with existing and new customers, confirms customer confidence in STL’s ability to provide top-quality, world-class optical and digital solutions,” he said in a Q3 financial report on 25 Jan 2024.
“While this downturn is temporary, the cost base and capabilities that we have built around product design, quality, manufacturing presence and sustainability will reap benefits far into the future,” said Agarwal.
“Regardless of the market cycle, we are as customer-centric as ever. I am confident that once the optical demand is normalised, we will hit the ground running and fast track towards becoming one of the top 3 optical players in the world.”
In this quarter, STL continued its active efforts towards developing products that solve the most compelling customer problems and recently unveiled its latest innovation in the minification of fibres – a 160-micron optical fibre.
For quarter ended 31 Dec 2023, the company reported Rs.1,322 crore in revenues and an order book of Rs.9,849 crore across its three business units – Optical Networking, Global Services and Digital.
The company reported a sequential decline in revenue and EBITDA in Q3 FY24 amidst ongoing optical demand headwinds, especially in the US and parts of Europe.
In the context of the Optical Networking business, telecom and broadband providers are re-adjusting their order planning in response to macroeconomic factors like higher cost of capital, inflation, and inventory buildup resulting in temporary demand softening for optical fibre cables.
Market feedback indicates a gradual recovery from Q2 FY 25 onwards. Despite weak operator spending and soft demand during the better part of the current fiscal, STL’s Optical Business maintained a steady EBITDA % of 18.4% on a 9-month basis.
Pushing forward on its focus on decarbonising the fibre value chain, the company also launched the world’s first third-party accredited eco-labelled cable products at the India Mobile Congress 2023.
STL is using this period to become more lean and agile and establish an industry-leading cost model. With a balanced approach of focusing on long-term fundamentals, strategic cost actions, geographically dispersed manufacturing units and capacities, along with a certified and field-tested portfolio of meaningful optical products, STL stands ready to deliver on the demand when the market conditions turn.
He also commented on STL’s Global Services Business which recorded sequential QoQ revenue and EBITDA growth, with strategic orders for fibre deployment and data centres.
STL Digital, STL’s newly incubated IT services business, reported a strong deal flow in the 9 months of FY24 and sequentially reduced EBITDA losses to inch closer to breaking even.
At an overall company level, STL also reduced its net debt by Rs.174 crore from FY 23 levels.
Financial Results:
Revenue was Rs.1,322cr for Q3 FY24 and Rs.4,338cr for 9M FY24.
EBITA was Rs.109cr, up 8%, for Q3 FY24, and Rs.559cr, up 13% for 9M FY24. Fiinews.com
