Unlisted Shares

Growth:​

• Overall Revenue: 20% YoY growth, driven by:
  • Power Product & Solutions: 3% YoY growth (62% revenue share)
  • Power Transmission Grid: 73% YoY surge (40% revenue share) - due to:
    • Increased order book, especially abroad (Brazil)
    • New transmission projects
• International Strength: 47% YoY growth in revenue from outside India (56% revenue share)
• Other Services: Strong growth in consultancy and other services (1% of net sales)

Profitability:​

• Gross Margins: Up due to stronger pricing in EHV & OPGW segment (Solutions) driven by renewable energy demand.
• EPC (Transmission): Growth due to increased concession projects in Brazil and India, but declining segment margins dragged down consolidated bottom line.
• Standalone Performance: Strong 30% YoY growth with NPM of 8% for FY23.
• EPC Margin Decline: Caused by:
  • Long gestation periods (up to 2 years) for new projects.
  • High upfront costs for acquisitions and setup.
• Consolidated Bottom Line: Negatively impacted by:
  • Net losses from subsidiaries & JVs in concession projects.
  • Solaris, Borborema, and Sterlite Grid 13 JV had the biggest negative impact.
• Financial Ratios:
  • ROE and ROA declined due to falling bottom line.
  • ROCE showed remarkable growth from 12% to 18% YoY.
• Future Outlook:
  • Profitability expected to improve as new transmission projects come online.
  • Power solutions segment also likely to benefit from improved profitability.

Upcoming:

• Green Energy Corridor: Building a 20 GW capacity corridor for renewable energy transmission.
• Fatehgarh III Beawar Project: Secured Part G Phase III, contributing to a major Green Energy Corridor upon completion.
• High Margins and Long-Term Agreements: EPC segment boasts historically high margins (~20%) and secure 25-30 year agreements (BOOM/BOOT).
• Demerger for Value Creation: SGL5 established as a separate entity with $300 million investment from GIC (Singapore) joint venture (51:49).
• Strategic Benefits:
  • Expected wealth creation for the company.
  • Contributes to EPS growth.

Investment Thesis: A Potentially Undervalued Gem in the Power Sector

SPTL Standalone PE is 20. The stock is trading significantly below industry averages (capital goods PE: 45, power transmission PE: 15), thus presenting a compelling investment opportunity backed by:

• Strong Fundamentals: Leader in conductors, growing HV/EHV cable portfolio, and presence in promising optical fiber space.
• Tailwind-Powered Growth:
  • Renewable Energy Surge: Boosts demand for SPTL's conductors and cables.
  • Transmission Expansion: Outpacing power generation, creating further demand.
  • Strategic Demerger: Unlocks value for core Product and service segments.
  • Ambitious Expansion: Doubling conductor capacity, entering overseas markets.
• Management Growth Forecasts:
  • Products Business: 49.1% CAGR revenue growth (FY23-FY26E) with 60bps EBITDA margin improvement.
  • Specialized EPC Services Business: 27.5% CAGR revenue growth (FY23-FY26E) with 310bps EBITDA margin improvement.

Key Person:  ​A VEDANTA Group powerhouse, Sterlite Power reigns supreme as a private power transmission player. With 32 completed and ongoing projects spanning 15,350+ circuit km in India and Brazil, they boast a robust portfolio and expertise in infrastructure development, conductors, cables, and fiber solutions. Spearheading the green energy push, Sterlite Power is the first to launch an InvIT in the sector and has bagged coveted titles like "Power Transmission Company of the Year" and international awards from S&P Platts and IPMA. They're a true game-changer in the sector.