Sterlite Electric FY26: The Business, the Real Profit, and What ₹478 a Share Buys You

Reviewed by BuyUnlistedShares Research Desk.

Sterlite Electric makes the hardware strung along India's power transmission lines—the conductors, cables, and substation gear that developers buy to build the grid—without building or owning any lines itself anymore. FY26 was its first full year operating this way after selling off its transmission-asset business in 2024. Revenue rose 26% to ₹6,254 crore and profit rose 30%—but the annual report also shows a ₹746 crore figure that looks like profit and isn't quite. With an IPO filed and the unlisted market pricing shares at ₹478, here's a factual walk-through of the business, the numbers, and the valuation, without any buy or sell suggestion attached.

From Competitor to Supplier: The 2024 Pivot

Until October 2024, the company (then called Sterlite Power Transmission) both built and owned transmission lines and manufactured the equipment that went into them. Owning lines is capital-intensive and slow to pay back; manufacturing is lighter, faster, and can sell to every developer in the market — including the ones the company used to bid against for projects. So it demerged the asset-owning business into a separate entity and renamed itself Sterlite Electric, keeping only the factories. FY26 is the first full year as this leaner, pure manufacturing business.

The Four Product Lines

Everything the company sells fits into four categories, based on FY26's order book:

Conductors and cables together made up 77% of FY26 revenue (₹4,807 crore) — this is, first and foremost, a factory business. The company claims roughly 20% share of India's conductor market, and its cable plant has been built to handle voltages up to 550 kV, among only a handful of Indian suppliers qualified for that range.

FY26 Financial Performance

The story in one line: revenue grew 26%, but aluminium (the main raw material) rose 48% in cost terms and now eats about two-thirds of every rupee earned — so operating profit (EBITDA) grew just 4%. Most of the year's actual profit growth came from a lower net finance cost, not from the factories running better. A ₹17 crore deferred-tax credit also helped keep the effective tax rate near 21%.

Why the ₹509 Crore Hedge Gain Isn't Real Profit

The annual report shows three numbers that all resemble "profit": ₹746 crore, ₹237 crore, and ₹210 crore. Here's the difference:

● ₹237 crore: actual profit after tax, earned from making and selling products — the real operating result.

● ₹509 crore (added on top, making ₹746 crore): a gain sitting in Other Comprehensive Income, almost entirely from hedging contracts on aluminum and copper. When metal prices rose sharply in FY26, the company's futures contracts gained value on paper.

● ₹210 crore: Of the ₹237 crore profit, this is the portion attributable to Sterlite Electric's own shareholders after accounting for minority partners in subsidiaries—the number behind the reported EPS of ₹14.57.

The hedge gain isn't cash profit — it exists to offset a higher raw-material cost the company will pay when it actually buys that metal in FY27, at which point the gain and the higher cost are expected to largely cancel out. It matters for two reasons: it's sitting inside net worth, which rose from ₹1,434 crore to ₹1,993 crore, meaning roughly a quarter of book value is currently a derivative mark rather than earned profit; and it's unrealised, so it could shrink if commodity prices fall back before the physical purchases happen. It's also worth noting FY25's headline profit was a loss of ₹156 crore only because the now-separated asset business booked a large loss before it left — the like-for-like comparison for the continuing business is ₹183 crore growing to ₹237 crore, not a loss turning into a profit.

Balance Sheet and Cash Flow

The company remains net cash and debt-to-equity is a modest 0.31. But the business is tying up more capital to fund its growth: inventories rose 50%, unbilled revenue more than doubled, and it leaned harder on supplier credit. As a result, operating cash flow nearly halved even as profit rose 30% — free cash flow after capex was only about ₹60 crore for the year. Return on capital employed fell from 24.8% to 16.9%, and debt-service coverage dipped just below 1x — signs of a business investing ahead of returns, not one in distress, but worth watching.

Order Book, Exports and Manufacturing Capacity

The closing order book stood at ₹6,619 crore — about 1.06 times FY26 revenue — split much like the product-line mix above, with management saying it bids selectively for margin rather than chasing order-book size. During the year, the company also cleared out more than ₹500 crore of older EPC contracts, reducing a type of long-tail exposure that has hurt industry peers.

● Exports fell sharply: down to 7% of revenue from 20% a year earlier, as large FY25 export contracts rolled off while domestic volumes surged. New qualifications in the UK, Nigeria, Oman, Nepal, and Bhutan suggest the pipeline is being rebuilt.

● Capacity expanded: conductor capacity rose 45% after expansion, and a new 18-acre plant in Vadodara — built for the highest-voltage cable grades — represents the company's biggest strategic bet, with ₹311 crore invested so far.

Sterlite Electric vs. Apar Industries

Apar Industries, a much larger listed conductor and cable maker, offers a useful yardstick:

Both companies operate at similar thin margins, since this is a pass-through, metal-heavy business for everyone in it. The gap shows up in capital efficiency: Apar converts similar margins into roughly double the return on capital, largely through a much tighter working-capital cycle built over decades, while Sterlite's receivables and unbilled revenue combined run over 100 days of sales. Sterlite grew a touch faster in FY26 and has a larger expansion underway; Apar has the longer track record.

Ownership Structure

As of 31 March 2026, on 12.60 crore equity shares:

On top of this equity sit 1.53 crore compulsorily convertible preference shares held by a private-equity group, which convert one-for-one into ordinary shares. On a fully diluted basis (about 14.13 crore shares), the promoter's stake works out to roughly 69.5%. The 20%+ held by individuals is unusually high for an unlisted company, reflecting a mix of legacy holders from an earlier corporate demerger and more recent unlisted-market buyers.

Recent Fundraising and a Deal That Fell Through

The company's last real capital raise was in FY25, not FY26:

● FY25 — CCPS round: ₹725 crore raised from a private-equity group at approximately ₹473 per share, alongside a lender converting ₹150 crore of debt into equity at the same price.

● FY26 — an attempted top-up that didn't happen: the same lender had also been allotted share warrants worth ₹284 crore at ₹473.32 per share in FY25, paying 5% upfront. When the company called the remaining ₹269.80 crore in September 2025, the lender declined, forfeiting its warrants and the upfront payment.

Beyond a trickle of employee stock option shares, that was the only equity movement in FY26. The company filed its draft IPO paperwork in September 2025, with the offering set to include an offer for sale by existing shareholders.

Unlisted Market Valuation

As of early September 2026, indicative unlisted pricing stood at ₹478 per share, implying a market value of roughly ₹6,750 crore on a fully diluted basis — almost exactly the ₹473 level at which private-equity investors bought in eighteen months earlier.

For comparison, Apar Industries trades at a considerably higher earnings multiple in the listed market, reflecting its stronger track record and higher returns on capital. Some discount for Sterlite is reasonable given its shorter standalone history, thinner cash generation, and the illiquidity that comes with unlisted shares carrying a post-listing lock-in. Whether the current price is attractive depends largely on one question: can profit growth outpace the working-capital drag that slowed cash generation in FY26.

Growth Drivers and Key Risks

What could work in the company's favour:

● A large capex cycle: the report cites an estimated ₹4.5–5.5 lakh crore of transmission investment expected across India through FY30, most of it conductor- and cable-intensive.

● A richer product mix: premium conductors and the new higher-voltage cable plant both carry better margins than commodity products.

● Rebuilding exports and data-centre demand: new international qualifications and a fast-growing (36%) fibre-leasing business tied to data centres.

What could work against it:

● Aluminium price swings: raw material is about two-thirds of cost, and hedges manage timing, not the underlying price trend.

● Working capital strain: cash tied up in inventory and unbilled revenue rose sharply, and operating cash flow nearly halved even as profit grew.

● Falling returns and a reversible reserve: return on capital employed dropped by a third, and about a quarter of book value sits in an unrealised hedge gain that could shrink.

● Competitive and IPO-related factors: larger, better-capitalised rivals in conductors and cables, an IPO structure that includes existing investors selling shares, and a lender that recently declined to invest further at the going price.

The Takeaway

Sterlite Electric gave up a stable, long-term transmission annuity to become a supplier to the same industry it used to compete in — and in its first full year running that way, it grew revenue 26% and profit 30% while holding a net-cash balance sheet. But the real, earned profit is ₹237 crore, not the ₹746 crore that first catches the eye on the statement, and the business is currently investing faster than it's converting that investment into cash or returns. The unlisted market's ₹478 price sits almost exactly where informed private investors valued the company eighteen months ago — suggesting the market is pricing in steady execution, not a dramatic re-rating, at least for now.

This article is for general informational purposes only and summarises publicly available information from the company's FY26 annual report. It is not investment, financial, or legal advice, and does not constitute a recommendation to buy, sell, or hold any security. Unlisted shares carry risks including illiquidity and valuation uncertainty. Readers should conduct independent research or consult a qualified, registered advisor before making financial decisions.

Frequently Asked Questions

1. What does Sterlite Electric actually make?

It manufactures the hardware that goes into power transmission lines — overhead conductors, OPGW (earth wire with fibre optics), high-voltage underground cables, and substation equipment — and also leases spare fibre capacity to telecom and data-centre customers.

2. Did Sterlite Electric used to own transmission lines?

Yes. Until October 2024 it both built/owned transmission lines and manufactured the equipment. It demerged the asset-owning business (now a separate company) and kept only the manufacturing operations, becoming a pure supplier — including to developers it once competed against.

3. How much profit did Sterlite Electric report in FY26?

The FY26 annual report shows a few different numbers that look like profit. The actual profit earned from operations was ₹237 crore, up 30% from ₹183 crore in the prior year's continuing business.

4. Why does the report also mention ₹746 crore?

That figure includes ₹509 crore of Other Comprehensive Income, almost entirely from a hedge on aluminium and copper price movements. It reflects the current value of contracts covering metal the company still has to buy — not cash profit from selling products.

5. Is the ₹509 crore hedge gain real money?

The contracts do have real value, but the gain is designed to offset a higher raw-material cost the company will pay later. Once that metal is purchased, the hedge gain and the higher cost are expected to roughly cancel out — so it isn't profit in the ordinary sense, and it could shrink if commodity prices reverse.

6. Why did margins fall even though revenue grew 26%?

Raw material costs (mostly aluminium) rose 48% and now consume about two-thirds of every rupee of revenue, up from just over half a year earlier. Revenue growth outpaced operating profit growth because metal costs ate into the difference.

7. Who owns Sterlite Electric?

As of March 2026, the promoter group (a Vedanta-group entity) held about 73% of equity shares. A private-equity group also holds convertible preference shares that, once converted, take the promoter's fully diluted stake to roughly 69.5%.

8. Has Sterlite Electric raised money recently?

The last real equity round was in FY25, when private-equity investors bought in at about ₹473 per share. A separate attempt in FY26 to raise further capital from an existing lender at the same price fell through when that lender declined to invest.

9. What is the unlisted market valuing Sterlite Electric at?

As of early September 2026, indicative unlisted pricing was around ₹478 per share — implying a market value of roughly ₹6,750 crore on a fully diluted basis, almost exactly where private-equity investors bought in eighteen months earlier.

10. Is this blog a recommendation to buy Sterlite Electric shares?

No. This article summarises publicly available information from the company's FY26 annual report for general informational purposes only. It is not investment, financial, or legal advice, and is not a recommendation to buy, sell, or hold any security. Unlisted shares carry risks including illiquidity and valuation uncertainty — readers should do their own research or consult a registered advisor.

Disclaimer:

This is written for educational and informational purposes only. Nothing here constitutes investment advice or a recommendation to buy or sell securities. All data is sourced from publicly available information. Investments in securities markets are subject to market risks—please read all offer documents carefully before investing.