Sterlite Technologies is the Optical Fiber and Telecom Cable manufacturing entity of the Sterlite Group that has interests in Copper, Aluminum, Mining and Telecom across four continents: from North America to Australia. Company came into presence by the de-merger of the telecom division of Sterlite Industries India Limited on 1st July 2000. Company created to enable a sharper focus on optical business separately. Company is the biggest player in the Indian telecom cable industry and has a dominant position in the JFTC (Jelly filled telecom cables), OF (optic fibre) and OFC (optical fibre cables) markets. Company derives significant portion of revenues from export markets. Being a leader in the traditional PIJF (Polythene insulated jelly filled telecables), the industry has evolved into a truly new generation communication products company. Market situation for optical fibre and optical fibre cables continues to improve in the domestic as well as international markets in coming years. In the domestic market, the demand originates from public sector companies like BSNL, Mahanagar Telephone Nigam (MTNL), Power Grid Corporation of India, Railways and Gas Authority of India, as well as from private sector groups like Reliance, Bharti, Tatas etc. Company has a memorandum of understanding (MoU) with General Cable Corporation (GCC) - a US-based third largest wire and cable manufacturing company in the world to form a 50:50 joint venture (JV).

Products & Services:

Sterlite Technologies Limited is one of the leading developers and manufacturers of optical fiber and fiber optical cables worldwide. Company is into manufacturing of optical fiber, fiber optic cables, LAN cables, Broadband solutions, Copper telecom cables etc. It is India's only fully integrated Optical Fiber producer and one of the largest suppliers of Optical Fibers to overseas markets in China, Europe and South East Asia. Sterlite Technologies is the only company to be awarded the 'Top Telecom Cables Company' in India, thrice in the past four years, as per the annual V&D 100 Survey. Sterlite is India's sole integrated Optical Fiber manufacturer, and is among the select few in South East Asia.

Company has a strong, globally competitive position in optical fiber and cables, which comes from technological advancements in its fiber production process. In India, company is the market leader with a share of over 60% in optical fiber and telecom cable products. Company's Technology Development Team draws upon some of the best available technical resources in the world with experience at leading global fiber manufacturers. The Team is constantly augmented by the inclusion of experts in the areas of product performance, process consistency and quality assurance. Its fiber optic cable portfolio includes high fiber-count cables for duct, direct buried and aerial deployment. Sterlite is the pioneer of ribbon fiber optic cables in India. All products are of ITU-T recommendations and EN 188000, EIA/TIA & IEC 793 Test Standards.

Recent developments:

Sterlite Technologies has charted out a Rs 2.50 billion capex outlay to scale its optical fibre capacity from 12 million-km to 20 million-km. The board of directors of the company has accorded its consent in the aforesaid matter. The enhanced capacity, which would be functional by 2011, would position Sterlite amongst the top 3 manufacturers globally.

Company announced that it has won a contract worth Rs 3.72 billion (USD 77 million) from Bharat Sanchar Nigam (BSNL) for enabling fibre-to-the-home (FTTH) network based on gigabit passive optical network (GPON) technology. The company was awarded major share of the total outlay of project, amongst competition from global players and has streamlined its efforts to ensure that the contract is executed within FY10. BSNL plans to implement similar FTTH networks at 25 cities across India by year 2012, which would impact 2 million subscribers. The current phase of the FTTH network would be capable of providing high-speed internet, IPTV solutions, VoIP, and other value added services to about 500,000 subscribers. BSNL would be one of the first telecom company's in the world to deploy commercial scale FTTH network

Valuation:

At current market price, stock is trading at attractive valuation of 8.96 P/E multiple of its FY2010 Estimated EPS. We recommend investors to “BUY” “Sterlite Technologies” with medium to long-term investment prospective.