Sterlite Technologies shares rally nearly 6% as company forays into data centre segment

The company said in an exchange filing that it has forayed into the AI-led Data Centre segment with a full-fledged demonstration of its integrated optical cable, connectivity, and interconnect offerings at the India Mobile Congress 2024.

Following the announcement, shares of Sterlite Technologies jumped nearly 6% to hit an intraday high of ₹128.3 apiece on the NSE. On a year-to-date (YTD) basis, shares of Sterlite Technologies have given subdued returns of 15% in 2024.

In addition, it said that over the past two years, over 200 chatGPT users have generated 1.5 billion AI queries per month. Considering the rapid rise in generative AI platforms, the user base is expected to increase to a billion users by 2025.

The Artificial Intelligence model runs on GPU-based servers, which are interconnected to the data centres through optical fibre cables. The company is estimated to garner 25% of the total revenue from the data centre segment in the medium term, it said.

The company expects the applicability of optical fibre cables and demand to increase multifold in the coming future. India is on the path to becoming one of the biggest hubs for data centres worldwide.

As per initial estimates, India is expected to boost its GPU-based server capacity in these AI-led data centres to nearly 5.2 lakh GPUs by 2026. These GPU-heavy data centres will require 36x more fibre than CPU racks, driven by increased server density and higher bandwidth requirements, said the company in its exchange filing.

Ankit Agarwal, Managing Director and CEO of Optical Business, Sterlite Technologies Ltd, said, The linkage between AI, data centres and optical fibre forms the holy trinity of future connectivity. "We have been deeply involved in building a suite of products that fit right into the most dense connectivity environments ever created."

In the previous quarter of the ongoing fiscal year (Q1FY25), the company reported a nearly 20% drop in total revenue from operations at ₹1,218 crore. Its operating profit margin came in at 7%, up 200 bps QoQ.

Its net loss during the quarter narrowed from ₹82 crore in Q4FY24 to ₹48 crore in Q1FY25.