Sterlite Tech Q2 profit dips 63% to Rs 58 cr hurt by lower revenue

Data network solutions provider Sterlite Technologies on Thursday posted over 63 per cent year-on-year decline in consolidated net profit for the second quarter ended September 2020 at Rs 58.5 crore, hurt by lower revenue and higher mix of service business.

However, the profit and revenue in September quarter were substantially higher sequentially, and the company exuded confidence that the sequential growth logged would continue for the next two quarters as well.

The net profit (attributable to owners) for Q2FY21 came in at Rs 58.47 crore, down 63.3 per cent year-on-year. The net profit in the corresponding period of previous year stood at Rs 159.56 crore, according to a regulatory filing.

Revenue from operations slipped nearly 15 per cent to Rs 1,159.5 crore in Q2FY21 from Rs 1,359.6 crore in the year-ago period.

However, the net profit was nine-fold higher than Rs 6 crore reported in first quarter of current fiscal. Revenue also rose over 32 per cent from June quarter.

The company said its manufacturing operations have exceeded pre-COVID levels and its order book is at an "all time high" of over Rs 10,705 crore with diversified wins.

"Digital network creators globally continue to invest aggressively in strengthening their current network, to increase reach and quality of their networks. Our strategic investments in building deep technology expertise, integrated digital network solutions, and global talent, positions us strongly to address this market demand," Sterlite Technologies Ltd (STL) Group CEO Anand Agarwal said in a statement.

Agarwal told PTI that the drop in profit on a year-on-year basis was primarily on account of overall decline in revenue and increasing proportion of service business, which runs on lower margins, but offers better returns on capital employed.

STL has initiated expansion of its optical fibre cable capacity to 33 million fibre km from 18 million fibre km as the company's strong customer engagement and solution offerings demonstrate positive long-term growth, the company statement said.

It said the capacity expansion is expected to be completed by June 2021.

The company, in an investor presentation, expressed confidence that it will continue to grow in the fiscal's third and fourth quarter on a sequential basis, and that the second half of FY21 will be better than the year-ago period.

Shares of STL on Thursday closed 4.12 per higher at Rs 158 apiece on the BSE.