PM Modi pitches for internet connectivity in villages; Sterlite Tech up 11%

Cords Cable Industries jumped 15.5%, Birla Cables (10.15%), Paramount Communications (8.94%), and ITI (4.4%) in intra-day trade

Cable stocks such as Sterlite Technologies, Finolex Cables, Polycab India, and ITI surged up to 11 per cent on the BSE on Monday after Prime Minister Narendra Modi announced on Saturday, August 15, that every village in India will get optical fiber internet in the next 1,000 days.

"In the last five years, 1.5 lakh gram panchayats in the country have been connected with optical fiber cables. Before 2014, only 5 dozen panchayats in the country were connected with optical fiber. Now, our aim is to connect every village with high-speed internet. This goal will be met in the coming thousand days. In the coming 1,000 days, every village in the country will be connected with optical fiber," PM Modi said from the ramparts of Red Fort in Delhi on the occasion of India's 74th Independence Day. That apart, PM Modi said that the Union Territory of Lakshadweep on the Arabian Sea will be connected with submarine optical fiber cable. 

Among individual stocks, Sterlite Technologies surged 11 per cent to Rs 144.35 apiece on the BSE. A combined 2.09 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report. 

"STL has set an ambitious three years target of doubling revenues to Rs 10,000 crore by FY23, riding on higher digital infra needs owing to increased data usage and transforming into a solution provider from products company. Given the transformation into solutions based player, it expects the addressable market to expand to $75 billion vs. $30 billion. It has also

set a target to cut down on debt equities ratio to 0.5x (in 3 years) from 1x currently, and maintain RoCE and dividend payouts of over 20 per cent and nearly 30 per cent, respectively. On the overall fibre demand perspective, the company perceives that 5G investment cycle on cusp of beginning and demand is likely to pick up from H2CY20, with decade long expected growth cycle," said analysts at ICICI Securities in a report dated July 24, adding, "We expect FY22 revenues to witness a spurt (up ~25 per cent YoY) driven by improved capacity utilisation as well as continued traction in solutions based business. We build in margins of 18%, 19% for FY20E, FY21E, respectively based on management guidance of margin band of 18-20 per cent, going ahead.

Besides, Cords Cable Industries jumped 15.5 per cent, Birla Cables (10.15 per cent), Paramount Communications (8.94 per cent), Universal Cables (8.4 per cent), ITI (4.4 per cent) and Finolex Cables (3.4 per cent). In comparison, the benchmark S&P BSE Sensex was up 56 points, or 0.09 per cent, at 37,912.84 level at 10:11 am. 

That apart, Polycab India, B.C Power, Vindhya Telelinks, KEI Industries, Delton Cables, Aksh Optifibre and Cybele Industries rallied up to 7 per cent on the BSE.  

The government has undertaken an "ambitious" initiative BharatNet -- or National Optical Fibre Network -- to trigger a broadband revolution in rural areas. The National Optical Fibre Network (NOFN) aims to connect all the 2,50,000 Gram panchayats in the country and provide 100 Mbps connectivity to all gram panchayats (GPs). Currently, 1,54,999 Gram Panchayats have been connected by optical fiber, under the ambitious BharatNet scheme. The second phase of the project is underway.