Sterlite Technologies (STL) reported a strong rebound in revenue growth in the third quarter of FY26, although profitability remained under pressure due to tariff-related uncertainties. The company’s performance reflects improving demand dynamics, particularly in North America, even as margin headwinds persist.
Consolidated revenue rose 21.6% quarter-on-quarter in Q3FY26, driven largely by the optical business, which grew nearly 20% sequentially. Revenue from the Americas climbed to ₹5.1 billion, up 42.2% QoQ, supported by increased demand from telecom operators and data centre connectivity customers. North America’s share of total revenue has expanded from 25% in FY25 to 36% in the first nine months of FY26.
Analysts expect the growth momentum to continue, aided by easing tariff pressures. The recent reduction in US reciprocal tariffs on India’s exports—from 25% to 18%—along with the removal of an additional punitive 25% levy, is seen as margin accretive over the medium term.
Despite the revenue recovery, STL’s consolidated EBITDA margin stood at 9.5% in Q3FY26, reflecting tariff headwinds that impacted margins by around 760 basis points during the quarter. Excluding tariff effects, margins improved significantly to about 17.1% year-on-year, supported by better utilisation and pricing.
Looking ahead, demand from hyperscalers, telecom firms and AI-led data centre expansion in North America is expected to remain a key growth driver. Industry projections indicate optical demand in the region could grow at a 13.7% CAGR through 2030, while installed data centre capacity in the US is forecast to nearly double by 2030.
Factoring in lower tariff impact, analysts have raised STL’s FY27E and FY28E earnings estimates by roughly 23%. The stock is valued at 8x March 2028 estimated EBITDA, with a revised target price of ₹200 (earlier ₹130), while maintaining a ‘Buy’ recommendation.
