Sterlite Technologies | Digital India play


(Vivek) #106

Sintex Plastics Technologies Limited its SPTL ( I think he is referring to this one only)


(learning) #108

I dont think Aksh is into preform mfg and is perhaps into drawing stage. But it is based on my understanding and i have not checked with Aksh on this matter. So, better to clarify with Aksh management as to which stage they operate in.


(ramanhp) #109

Interesting article on The-Ken regarding push for satellite broadband in India. Initial days as there are lot of regulatory roadblocks. However, even the industry leaders of Satellite broadband, envision it to be a small part of over all broadband sourcing.

"Private satellite manufacturers believe satellite broadband will become viable and volume business will come out of India once there is clarity in regulation and licences are given. Satellite broadcasting costs came down because dishes came up everywhere.
“It’s a myth that satellite bandwidth is expensive. The supply is so constrained today,” says an executive of an international satellite operator. “Today, I pay $1 million for a transponder. If I can serve 1 million sites, my cost will be just $1 per site. I may not be able to serve a customer in Tinsukia [in Assam] or Gorakhpur [in Uttar Pradesh] at the same rate as Delhi, but at 20% higher, I give them an option when she had none.”
3.3 Zettabyte
The estimated global demand for broadband by 2021
The collective broadband need is ever-growing. Das of Aniara has an 80:20 rule—80% of the demand will be met by fibre, 20% by satellite. By that measure, 20% of the estimated global demand of 3.3 Zettabyte (1 ZB=1 trillion GB) by 2021, which is 0.6 trillion GB, is going to be the satellite broadband requirement.
"


(rupaniamit) #110

Global preform demand-supply equation is going to be key component driving Sterlite’s future earnings and margins prospects. As we know globally there are 8 preform manufactures, most of them don’t share their current capacity and future capacity expansion plans. Management has also informed on con-calls that no one in fiber industry gives the kind of capacity disclosures that Sterlite provides. Corning and Shin-Etsu just share announcement of their capacity expansion but not the actual expansion numbers.

Sterlite management said that their capacity expansion is happening more by their customer engagements and not by seeing demand/supply mismatch.

Although based on current situation and fiber demand/consumption patterns, it seems like demand will outweigh supply in short-run (may be 2-3 years). But I believe that one day it will change and lean towards supply. When will it happen is anyone’s guess today.

Google search results got me to below mentioned sites providing paid reports which may have current glass preform capacity and future expansion plans:

  1. https://www.crugroup.com/analysis/monitors/ (company has used CRU reports data in it’s Annual Report)
  2. https://marketresearch.biz/report/fiber-optics-market/request-sample/

Has anyone found a way except above mentioned expensive options to track demand/supply situation?

Thanks,
Amit

Disc: invested


(Mehnazfatima) #111

Aksh imports preform from Shintzu the Japanese company under long term contracts…,even sterlite imports from the same supplier as it’s preform capacity is not adequate / and has quality issues


(ramanhp) #112

https://www.cnbctv18.com/videos/market/stocks/mehraboon-irani-positive-on-mahindra-cie-and-sterlite-technologies-231881.htm


(rupaniamit) #113

Re: sterlite imports from same supplier as it’s preform capacity is not adequate - can you please share source of your information?


(Mehnazfatima) #114

Meeting with mngt of competitor of sterlite tech


(Mehnazfatima) #115

As pointed out earlier in this thread, this is like a commodity business. Optical fibres and optical fiber cables…as long as they come with quality criteria…are just commodities. And as of now, there is a demand supply mismatch in the sector. There is lot of demand for optical fiber…3G…4G…5G…FTTH…IOT…and a lot of demand coming from China, USA, Europe and even MENA region…while manufacturers are adding additional capacity to keep up with the demand and protect market share

As it’s a commodity upcycle, I suggest that we apply rules of commodity investing here…in commodity upcycle, it’s the market leader that runs up first as was seen in case of Sterlite tech which was first off the block…in the later phase of the commodity cycle the second rung players start running ( there is already a breakout on long term charts in Aksh Optifibre, HFCL and Birla cables)…now we can expect the second rung players to rally as the market leader Sterlite goes into consolidation…thirdly the best returns in the upcycle are given by companies which show the most dramatic increase in eps in percentage terms (here Aksh may perform better than it’s peers as it’s eps is set to rise from 1.4 in FY18 to 4 rupees + in FY19 and perhaps 6 rupees in FY20)

Recognizing the commodity nature of this business, Aksh Optifibre too is focussing on two commodity components - FRP rods and Optical fibres which have higher margins rather than cables which has moderate margins. Among other players, HFCL is into selling of both cables and equipment which may dampen it’s margins…sterlite too is adding huge optical fiber capacity which was to be completed by june
2019 end. But we do not know as to how much fiber is for captive consumption and what proportion is for outside sale…so pure commodity plays are better than diversified commodity plays insofar as returns in upcycle are concerned.

And finally when they become pure value companies trading at low p/e …it’s time to exit.


Aksh Optifibre fundamental analysis
(ukdube) #116

5G spectrum auction can be one the largest spectrum auctions in India if telecom operators such as Bharti Airtel, Idea-Vodafone, Reliance Jio and BSNL show interest in buying frequencies for the next generation services. But debt-ridden telecom industry will look for a cost effective spectrum to run 5G in 2020.

http://www.telecomlead.com/5g/india-can-keep-6000-mhz-for-5g-spectrum-auction-84749


(ukdube) #117

Another interesting write up


(The Wise Owl) #118

(ukdube) #120

@Mehnazfatima your views invited and how will it impact STL and Aksh

https://www.cnbc.com/amp/2018/07/10/china-raises-tariff-rates-for-some-us-optical-fiber-products-from-jul.html


(Mehnazfatima) #121

Chinese have levied anti dumping duty on optical fiber products originating from USA…whereas Sterlite and Aksh are coming up with manufacturing capex in China…I would assume that the effect on these two would be neutral or very slightly positive…mostly it will be eps neutral.