Nomura initiated coverage on Sterlite Technologies with a ‘Buy’ rating and a price target of ₹1,350. Shares will be in focus on Tuesday, October 6, after the stock gained nearly 865% this year. Nomura said, "STL is well positioned to benefit from this trend through its integrated manufacturing capabilities."
Nomura expects strong industry tailwinds to drive robust growth for Sterlite Technologies, with the brokerage forecasting a 14% compound annual growth rate (CAGR) in optical fibre cable (OFC) demand across its key North American and European markets over CY25–30E.
By Meghna Sen
Shares of Sterlite Technologies Ltd. will be in focus on Tuesday, October 6, after global brokerage firm Nomura initiated coverage on the company with a ‘Buy’ rating and a price target of ₹1,350 per share.
The target price implies a potential upside of around 35% from the stock’s previous closing price of ₹1,003.10.
Nomura expects strong industry tailwinds to drive robust growth for Sterlite Technologies, with the brokerage forecasting a 14% compound annual growth rate (CAGR) in optical fibre cable (OFC) demand across its key North American and European markets over CY25–30E.
According to the brokerage, constrained supply due to limited glass preform capacity, raw-material bottlenecks and limited ex-China capacity has created a persistent supply deficit. This has pushed hyperscalers towards multi-year supply agreements and could create further opportunities for players such as STL.
Nomura estimates Sterlite Technologies' revenue and EBITDA to grow at CAGRs of 50% and 89%, respectively, over FY26–29F.
The brokerage expects robust data centre additions, coupled with constrained supply, to drive an OFC demand supercycle. It said STL is well positioned to benefit from this trend through its integrated manufacturing capabilities.
STL's integrated manufacturing model could help it gain market share as non-integrated peers face glass preform supply bottlenecks, Nomura said. The company has already secured major hyperscaler contracts and has a broad portfolio of data centre offerings.
Nomura estimates STL had a 9% share of the global ex-China OFC market in Q1FY27. Its data centre market share, currently in the low single digits, could rise towards the high single digits, according to the brokerage, supported by its product portfolio, established hyperscaler relationships and industry experience.
Key risks flagged by Nomura include a slowdown in artificial intelligence data centre capital expenditure, faster-than-expected commissioning of industry capacity, weaker-than-expected order intake and execution, and cash outflows related to legal claims.
Sterlite Technologies shares settled 5% higher at ₹1,003.10 on Monday. The stock has gained nearly 865% year-to-date.