Up 1,050% in 9 months! Nirmal Bang sees 40% upside in this multibagger stock; here's why

Sterlite Technologies target price: Domestic brokerage firms Nirmal Bang institutional Equities has initiated coverage on Multibagger stocks Sterlite Technologies Ltd (STL), which has surged more than 1,050 per cent in the last nine months and it sees another 40 per cent upside in the counter from its previous close.

Nirmal Bang said the expected upside is backed by stronger demand, a recovery in earnings and a rising share of higher-margin connectivity products. It said Sterlite Tech is an integrated optical connectivity company, with optical networking contributing about 95 per cent of revenue.

Shares of Sterlite Tech soared another 3.7 per cent to Rs 989.70 on Monday, with its market capitalization hitting Rs 51,000 crore mark. The stock has soared 1,070 per cent from its 52-week low at Rs 84.65 hit on January 27 this year. The stock has zoomed as much as 425 per cent in the last six months.

It manufactures optical fibre, optical fibre cables and connectivity products, giving it a presence across the chain from glass to data centre, said Nirmal Bang. According to it, STL has about 9 per cent of the global OFC market outside China. It expects AI and data-centre expansion, government-led broadband programmes and 5G and 6G roll-outs to drive growth.

Global data-centre capacity is projected to rise from about 102 GW in 2026 to 220 GW by 2030, while ex-China optical fibre demand is seen growing at about 12 per cent CAGR through 2030. The stronger demand environment has already improved STL's financial performance. It moved from a loss of Rs 123 crore in FY25 to a profit of Rs 56 crore in FY26, while Q1 FY27 profit stood at Rs 196 crore.

Nirmal Bang expects revenue to rise 103 per cent to Rs 9,625.6 crore in FY27 and further to Rs 16,828.8 crore by FY29, with OFC volumes increasing from 32 million fibre-km in FY26 to 68 million fibre-km by FY29. The brokerage expects EBITDA margin to expand from 12.3 per cent in FY26 to 23 per cent in FY27, while gross margin may improve to 52 per cent from 49.7 per cent. It also estimates OFC realisations could rise from Rs 1,219 per fibre-km in FY26 to Rs 1,942 per fibre-km by FY29.

Nirmal Bang also sees connectivity products as a key growth lever as STL's mix shifts towards data centres. It expects the connectivity attach rate to rise from 15 per cent in FY26 to 23 per cent in FY27 and 25 per cent by FY28-29, which could lift connectivity revenue from Rs 590 crore in FY26 to Rs 3,320 crore by FY29.

North America is emerging as a major earnings driver, with the region's share in revenue rising from 39 per cent in FY26 to 54 per cent in Q1 FY27. The brokerage said STL's South Carolina facility, its relationships with tier-1 operators and hyperscalers, and its non-China supply chain position it well to benefit as US customers diversify sourcing.

It noted that tariffs of more than 100 per cent on China-origin fibre-optic cables could support this shift. Nirmal Bang expects return ratios to improve sharply, with RoE rising from 2.5 per cent in FY26 to 28.4 per cent by FY29 and RoCE from 3.5 per cent to 27.4 per cent.

The brokerage said its FY29 estimates remain relatively conservative, factoring in moderation in optical-fibre pricing, a slower data-centre and connectivity ramp-up, and execution risks linked to capacity expansion. It has given a target price of Rs 1,340 for the stock with a 'buy' rating, suggesting an upside potential of 40 per cent from its previous close.