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Sterlite Technologies is an Indian multinational technology company specializing in optical fiber and cables, hyper-scale network design and deployment, and network software. It is a publicly-traded company listed on the National Stock Exchange of India and the Bombay Stock Exchange. This means that everyone interested can purchase shares of this firm. But is investing in Sterlite Technologies a good choice? Let’s look into this question more deeply.
Image credit: Sterlite Technologies
Table of Contents
What is Sterlite Technologies? (Company profile)
Sterlite Technologies is among the leaders in business areas such as design, creation, and management of smart digital networks. The company provides end-to-end solutions for telecom networks, power transmission, and broadband infrastructure.
Since its founding in 2000, Sterlite Technologies has been constantly focused on innovation and sustainability, and committed to creating cutting-edge products and services. This business venture has grown quite rapidly and has become a trusted partner to some of the world’s largest telecommunications companies, governments, and enterprises. Recently the company has been investing in the creation of the 5G infrastructure in India
At the present time, the company’s operations span across 6 continents and include manufacturing facilities, research and development centers, and a vast network of sales and support teams.
The core services of Sterlite Technologies are based on optical fiber and cable technologies, network services, and software and system integration. As a part of its strategy, the company aims to create a positive impact on society and the environment. With this in mind, it prioritizes using renewable energy sources, reducing carbon emissions, and promoting responsible sourcing and manufacturing practices in all of its activities.
Sterlite Technologies stock price trend (year-to-date, on March 15, 2023). Image credit: Google
What are the prospects for Sterlite Technologies’ share price?
The company has a market capitalization of over INR 17,000 crores (as of March 15, 2023) and has consistently delivered strong financial performance over the years. However, the attractiveness of any stock investment option depends on various factors such as the investor’s risk appetite, investment horizon, financial goals, market conditions, and the company’s future prospects.
The ROCE (return on capital employed) of Sterlite is 9.0%. It is relatively low, especially compared to the sector’s average, which is 20%. What are the trends of ROCE movements in this venture? Five years ago, it was 34% and has now decreased. There may be several explanations behind that. If the company invests in growth, the extra capital may lead to a short-term reduction in ROCE.
However, some of the other metrics aren’t that positive. Sterlite Technologies’ current liabilities have increased over the last five years to 61% of total assets. That can pose additional risks. Moreover, the stock price has declined 11,76 % in the last year.
Despite the fact that the revenue of the company grew for the two recent quarters, and in FY 2022 the revenue growth amounted to 19.42 %, its annual profit after tax decreased by 77.51 % over the same fiscal year. In relation to this trend, the Sterlite Technologies share price dipped by 10.45 % year-to-date, and 6.49 % over the last month.
On the other hand, Sterlite Technologies’ share price remained relatively stable since September 2022. Those who invest in this company probably cannot expect price jumps, but the risk to lose value is not high either.
Final word
Sterlite Technologies isn’t earning the highest return at the moment. But if its investments go well, it may offer a stock’s growth in the long term, and therefore it could be an attractive investment option for those who are looking for medium-term or long-term investments.
Written by Giedrius Pakalka and Alius Noreika
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