Data-center mix target jumps to 50%, no bridge given
Management raised the enterprise and data center revenue share guidance to 50% for FY27 from 30% in April without explaining how the 21% Q1 mix can reach that by year-end.
What's new
- Q1 revenue hit ₹9,110 crore, up 87% YoY; EBITDA was ₹397 crore, up 184%.
- Order intake reached ₹13,100 crore, 1.7 times the prior full year.
- Data center contributed 21% of revenue, up from 1% in FY26.
- Net cash of ₹483 crore after a ₹1,500 crore QIP; 75% of proceeds for debt reduction.
Themes from the call
Demand
Record order intake of ₹13,100 crore, led by a $1.1 billion hyperscaler deal, pushing open order book to ₹18,618 crore, 2.4 times sequentially.
Margins
EBITDA margin guidance raised to 23% from 20%, but Q1 reported EBITDA margin is only about 4.4%; management attributes gap to mix and utilization, not quantified.
Capital allocation
Capex plan expanded to ₹500 crore per year for three years (₹1,500 crore), up from a previous ₹500 crore near-term figure; QIP of ₹1,500 crore completed, mostly to pare debt.
Guidance watch
- Enterprise and data center revenue share targeted at 50% for FY27, up from 30% in April.
- EBITDA margin target raised to 23% for FY27, with Q1 at about 4.4% as reported.
- Annual capex of about ₹500 crore for next three years, cumulatively ₹1,500 crore.
- Optical connectivity attach rate to reach 25% by Q4 FY27.
Risk flags
- No quantified bridge from 21% Q1 data center mix to 50% full-year target.
- Reported EBITDA margin of about 4.4% is far from the 20% level management says it achieved; clarified number or calculation basis needed.
- Germanium and gallium sourcing and pass-through limits remain unquantified.
- Full-year revenue and growth guidance refused despite a large order book.
Key quotes
-
"Looking ahead, we expect the combined data center and enterprise segments to scale up to 50% of the revenues in the current fiscal year, well above the 30% guidance provided in our previous earnings call."
— Sterlite Tech management, Jul 2026 call -
"We are now revising our EBITDA margin guidance upward to 23%."
— Ajay Gangawani, Group CFO, prepared remarks -
"Looking ahead, with accelerating AI data center investments and pipeline visibility, we expect the Enterprise and Data Center segment to scale up to 30% of revenues in the current fiscal."
— Sterlite Tech management, Apr 2026 call
The brief
Sterlite Tech delivered a blockbuster quarter: revenue up 87%, EBITDA up 184%, order intake of ₹13,100 crore and a net cash position after a ₹1,500 crore QIP. The data center pivot is real. Twenty-one percent of Q1 revenue versus 1% last year. The trouble is not the numbers but the guidance. In April management said enterprise and data center would be 30% of FY27 revenue. Three months later it said 50%. The gap between 21% in Q1 and 50% for the full year is not bridged; no order pipeline conversion logic, no revenue waterfall. The same leapfrog pattern shows up in capex: an earlier ₹500 crore near-term figure became ₹500 crore a year for three years, with no reconciliation. EBITDA margin guidance jumped from 20% to 23%, yet the reported EBITDA of ₹397 crore on revenue of ₹9,110 crore works out to roughly 4.4%, not 20%. Management said the 20% margin was already delivered, but the math does not show it. The QIP went from an enabling resolution to a done deal in one quarter. Sterlite Tech has the orders, the product shift and the balance sheet. What it lacks is a consistent story from one call to the next. The stock will price the demand cycle; the guidance credibility is a separate question.
Sterlite Tech's numbers are strong; its guidance math is not. The strategy is working; the communication is not.