Sterlite Technologies (STL) shares were locked in a 5% lower circuit at ₹827.60 on Friday, October 30, extending their losses to a third consecutive session. The stock has fallen around 9% in three sessions, despite reporting a sharp jump in second-quarter earnings and securing large orders linked to artificial intelligence (AI) infrastructure.
The recent decline followed a 14% rally over three sessions, suggesting that investors may be booking profits after the stock’s strong run-up. However, the company’s substantial gains over the past year, ambitious growth targets and elevated expectations have also kept the focus on its valuation and execution.
Why is Sterlite Technologies share price falling?
Profit booking is a key factor behind the recent decline. Sterlite Technologies has delivered a multibagger rally this year, driven by optimism around rising demand for optical fibre and connectivity products used in AI data centres, as well as large, multi-year hyperscaler orders.
The stock has gained 55% in three months, 179% in six months and 580% in one year, despite losing more than 9% over the past month. It touched a 52-week high of ₹1,054.45 on October 7, compared with its 52-week low of ₹84.65 in January 2026.
The sharp run-up has raised the possibility of investors booking profits following the latest earnings-driven rally. Volatility in global AI and semiconductor-linked technology stocks has also dampened momentum in infrastructure and connectivity companies.
Investors are also weighing the company’s ambitious FY29 revenue and margin targets against near-term execution requirements and its valuation following the steep rally.
Strong Q2 results and record order book
Sterlite Technologies reported a net profit of ₹517 crore for the September quarter, compared with ₹4 crore a year earlier. Revenue from operations surged 145% year-on-year to a record ₹2,529 crore from ₹1,034 crore.
EBITDA rose sharply to ₹846 crore from ₹141 crore in the year-ago quarter, according to the company’s reported results. The profit also benefited from a one-time tariff refund gain.
The company attributed its performance to demand for AI-ready digital infrastructure, optical connectivity products and data-centre networks. Its open order book reached a record ₹35,274 crore at the end of September, while the company reported a net debt-free balance sheet during the quarter.
Among its major contracts was a multi-year agreement worth $1.2 billion, or approximately ₹11,500 crore, with a US hyperscaler for optical connectivity products between 2026 and 2030. Other agreements included a $1.11 billion product award letter from another hyperscaler and contracts with telecom operators.
Commenting on the performance, Ankit Agarwal, managing director of Sterlite Technologies, said, “Q2 FY27 is our best quarter yet, with the highest revenue and EBITDA in STL’s history.”
The company raised its FY29 EBITDA margin guidance to 30% or more from 27% or more earlier, while retaining its FY29 revenue target of ₹200 billion under its Lakshya 2029 programme.
Should you buy Sterlite Technologies shares now?
Global brokerge house Nomura has maintained its Buy rating on Sterlite Technologies with a target price of ₹1,350. The brokerage raised its FY27, FY28 and FY29 EBITDA margin estimates by 151 basis points, 153 basis points and 58 basis points, respectively, following the strong quarterly performance and improved margin guidance.
Nomura also increased its FY27 and FY28 earnings-per-share estimates by 12% and 6%, respectively, while keeping its FY29 estimate largely unchanged. It cited improving product mix and rising data-centre exposure as key factors supporting its outlook.
The brokerage’s valuation is based on 30 times its estimated December 2028 earnings per share. However, it flagged risks including a slowdown in AI data-centre capital expenditure, faster-than-expected industry capacity additions, weaker operating income, execution challenges and higher cash outflows from legal claims.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
