Sterlite Electric: the company that makes the wire India's grid runs on

Picture a 400 kV transmission line from Delhi to Agra. A developer, say Adani Energy Solutions, wins it in a tariff-based auction. Adani will own that line for 35 years, collect a regulated transmission charge every month, and book it as an infrastructure asset.

But Adani doesn't make anything. Somebody has to manufacture the aluminium wire strung between the towers, the earth wire on top that absorbs lightning, the cable that goes underground when the line enters Delhi, and the substation gear that steps the voltage up and down.

That somebody is Sterlite Electric. And the interesting part is that until two years ago, Sterlite was Adani's competitor, not its supplier.

Until October 2024 the company was called Sterlite Power Transmission, and it did both things: built and owned transmission lines (in India and Brazil), and manufactured the conductors and cables that went into them. The asset business is capital-hungry, slow to pay back, and needs a utility-sized balance sheet. The manufacturing business is lighter, faster, and sells to everyone, including the developers you would otherwise bid against.

So the company demerged the asset business into a separate entity (Sterlite Grid 5, now Resonia), kept the factories, and renamed itself Sterlite Electric. FY26 is the first clean, full year as a pure products-and-solutions company. Everything below is about that continuing business.

Back to Delhi–Agra. Sterlite runs four business lines, and each one has a spot on that line.

1. Overhead conductors and OPGW (56% of order book). The conductor is the aluminium wire itself, the biggest bought-out item on a line after towers. Sterlite makes plain conductors, but its pitch is high-performance ones: AL59 alloy and HTLS varieties (ACCC, ACSS, GAP) that carry more current on the same tower. AL59 alone was ~55% of conductor revenue in FY26, and the company claims roughly 20% of India's conductor market. OPGW is the earth wire at the top of the tower with optical fibre inside; every EHV line needs one.

2. Power cables (27%). When the line enters a city, it goes underground. Sterlite makes 66–220 kV EHV cables today, has its first 400 kV order, and has built a plant designed for up to 550 kV. It also sells "IntelliSENSE" monitored cable systems: cable plus sensors plus turnkey installation.

3. Master System Integration (11%). If the corridor already exists and the developer wants more power through it, Sterlite's services arm does reconductoring, grid uprating and GIS substation execution. This is the EPC layer, kept deliberately small.

4. Convergence (6%). Once the line is live, spare fibre inside the OPGW is leased to telcos and data centres as dark fibre. Sterlite does this on its own network (23,000+ route km of OPGW, 73 colocation sites, access to 19,000+ towers) and via PPP deals with utilities.

Adani pays Sterlite once for the hardware, earns a manufacturing margin, and moves on. The 35-year annuity stays with Adani. That is the trade Sterlite made: give up the annuity, gain the volume.

In FY26, conductors and cables together were ₹4,807 crore, or 77% of revenue. EPC was ₹1,164 crore. Convergence's lease income was ₹119 crore. This is, first and foremost, a factory business.

The FY26 annual report shows three numbers that all look like "profit": ₹746 crore, ₹237 crore and ₹210 crore. Here is how you get from the top of the P&L to each of them.

1. Revenue: ₹6,254 crore (+26% from ₹4,956 crore). Sales of conductors, cables, EPC work and fibre leases. Add ₹15 crore of other income.

2. Raw material: ₹4,107 crore (+48%). Mostly aluminium. Two-thirds of every rupee of revenue went straight back out as metal. A year ago it was 56%. That one shift explains the whole margin story.

3. Construction and contract expenses: ₹947 crore. Subcontractors and material on EPC jobs. Flat, because the company isn't growing this line.

4. Change in inventories: (₹100 crore). A negative expense: finished goods worth ₹100 crore were made but not yet sold by 31 March. Their cost sits on the balance sheet, not in this year's P&L.

5. Employees ₹185 crore, other expenses ₹639 crore. Power, freight, packing, professional fees.

6. EBITDA: ₹491 crore (+4%). Margin 7.85%, down from 9.53%. Revenue grew 26%; operating profit grew 4%. Aluminium ate the difference.

7. Depreciation ₹64 crore. Net finance cost ₹121 crore (down from ₹155 crore). Sterlite has a large gross interest bill (working-capital lines, supplier-finance acceptances, lease unwinding) but also earns interest on a ₹1,400 crore cash-and-deposits pile. The net cost fell, and this is where most of the year's profit growth came from, not the factory.

8. Exceptional item ₹5 crore. PBT ₹301 crore (+15%). Tax ₹64 crore, an effective 21% thanks to a ₹17 crore deferred-tax credit and a ₹5 crore earlier-year reversal.

9. Profit after tax: ₹237 crore (+30%).

That's the business. That's what Sterlite earned by making and selling things after paying everyone it owed.

Because below the P&L sits a section called Other Comprehensive Income, and Sterlite's FY26 OCI is enormous: ₹509 crore after tax. Almost all of it is one line: net movement on cash flow hedges, ₹683 crore gross.

Sterlite buys aluminium, copper and lead. To avoid getting caught by price swings between winning an order and buying the metal, it buys commodity futures and currency forwards. When aluminium rose sharply during FY26, those futures went into the money; on 31 March 2026 the open contracts were worth ₹683 crore more than when they were struck.

Is that a real gain? The contracts have real value, yes. But it isn't profit. Those futures cover metal Sterlite still has to buy in FY27. When it buys that metal it will pay the higher market price, and the hedge gain gets released to cancel the higher cost. Net effect on FY27's P&L: roughly nil. A hedge is a loss avoided, not a profit made.

And the hedges that matured during FY26? Their gains are already netted inside the ₹4,107 crore raw-material line. Without them that number would be bigger and the ₹237 crore smaller. The benefit reached the P&L; it just doesn't get its own row.

Two reasons this ₹509 crore still matters. It's sitting in equity: net worth rose from ₹1,434 crore to ₹1,993 crore, and only ₹237 crore of that is earned profit, so about a quarter of book value is a derivative mark. And it's unrealised: if aluminium falls back before the physical purchases happen, the reserve shrinks and so does book value.

Of the ₹237 crore, ₹27 crore belongs to minority partners in subsidiaries. ₹210 crore is attributable to Sterlite Electric's own shareholders, and that's the number behind the reported EPS of ₹14.57.

One last note on the comparison year. FY25's headline bottom line was a loss of ₹156 crore, because the demerged asset business booked a ₹339 crore loss before it left. The continuing business made ₹183 crore. The 30% profit growth is ₹183 → ₹237, not loss → profit.

Inventories up 50%, receivables up 16%, unbilled revenue more than doubled, and the company leaned harder on supplier credit (acceptances up 50%). Net working capital went from ₹1,071 crore to ₹1,686 crore (company-reported figure in the MD&A). That is what a 26% revenue ramp plus a new factory looks like.

Debt-to-equity is only 0.31 and the company is still net cash. But debt service coverage slipped below 1 (0.84), and consolidated return on capital employed dropped from 24.8% to 16.9%. More capital in the business; not earning more yet.

Operating cash flow nearly halved even as profit rose 30%, because the working-capital build above swallowed it. Free cash flow after capex was about ₹60 crore. A bigger dividend (₹6 per share, ₹83 crore) plus Vadodara capex were funded from existing cash and short-term borrowings. The net-cash position survived; cash generation didn't keep pace with growth.

Closing order book: ₹6,619 crore, about 1.06x FY26 revenue.

Management says it bids selectively for margin rather than for order-book size, so don't expect this to balloon. Cables is the line to watch: a first 400 kV order, repeat utility wins and a 36 km monitored-cable turnkey order suggest the new plant has commercial pull. During the year the company also closed out more than ₹500 crore of legacy MSI packages, a cleanup that removes the kind of long-tail EPC exposure that has hurt peers.

Exports were ₹451 crore, just 7% of revenue, down from 20% in FY25. The report states it without explaining it; the likely reading is that large FY25 export contracts rolled off while domestic volumes surged. New wins in the UK (National Grid), Nigeria, Oman, Nepal and Bhutan suggest the pipeline is being rebuilt, but the business is more India-dependent than it was a year ago.

Conductor capacity rose 45% after expansion (FY25 base ~117,000 MT). FY26 output: 128,153 MT of conductors, 2,700 km of 66 kV-equivalent cable, 1,200 km of MV cable, 1,000 km of solar cable.

Vadodara is the strategic bet: an 18-acre greenfield site built for the highest-voltage cable grades, with e-beam and Sioplas technology added during the year. ₹311 crore of CWIP is sitting there waiting to become revenue. If it ramps well, the cable mix shifts to higher-value products and the margin story changes. If it ramps slowly, that capital drags ROCE further. A cost programme, Project Ahvaan, is credited with ~₹85 crore of FY26 savings.

Apar Industries is the yardstick: the world's largest aluminium conductor maker, with cables and transformer oils on top. Apar figures from Screener, consolidated FY26, price as of 4 September 2026.

*Calc: Sterlite ROE = ₹237 cr PAT ÷ average net worth (₹1,434 + ₹1,993)/2 = 13.8%; on FY26 closing equity 11.9%, which is UnlistedZone's figure. The report's own ratio table (standalone) shows 9%. Apar conductor revenue = 51% segment share × ₹22,902 cr, from Screener.

Apar's conductor division alone is roughly twice Sterlite's entire company. Both run at 8% margins, because this is a pass-through business for everyone. But Apar turns that into a 32% ROCE and Sterlite into 17%: Apar has spent decades squeezing working capital (cash conversion cycle ~30 days per Screener) while Sterlite's receivables plus unbilled revenue are over 100 days of sales (calc: receivables ₹1,259 cr + contract assets ₹593 cr = ₹1,851 cr ÷ ₹6,254 cr revenue × 365 ≈ 108 days; receivables alone ≈ 73 days). Sterlite grew a bit faster in FY26 and has a bigger expansion under way; Apar has the track record.

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

On top of the equity are 1.53 crore compulsorily convertible preference shares (CCPS) that convert one-for-one. Fully diluted, the count is about 14.13 crore shares, the number UnlistedZone uses, on which the promoter holds 69.5%.

The CCPS are held by a private-equity group led by South Asia Growth Fund III (GEF Capital) with Volrado Venture Partners and Trufort, who signed a shareholders' agreement in 2024 and waived certain rights in June 2025 ahead of the IPO. The 20% held by individuals is unusually high for an unlisted company: partly legacy holders from the original Sterlite Technologies demerger, partly the unlisted market.

Not in FY26. The real round was FY25, and one attempted top-up in FY26 fell through.

FY25, at ₹473.32 per share:

• 1.53 crore CCPS issued for ₹725 crore to the GEF-led group (calc: ₹725 cr ÷ 1.532 cr shares ≈ ₹473).

• PTC Cables Private Limited, a lender, converted ₹150 crore of loan into equity.

FY26, the raise that didn't happen. In FY25 the company had also allotted 60 lakh share warrants to PTC Cables for a total of ₹284 crore (calc: ₹284 cr ÷ 60,00,169 warrants = ₹473.32 per share — same as the loan-conversion price disclosed in Note 17), with 5% (₹14.20 crore) paid upfront. In September 2025, ahead of the DRHP filing, the board called the remaining ₹269.80 crore. PTC declined. The warrants were forfeited and Sterlite kept the ₹14.20 crore (cross-check: "money received against share warrants" fell from ₹14.20 cr to nil on the balance sheet, and "capital reserve" rose by the same ₹14.20 cr).

Read that however you like: a lender-turned-investor was offered ₹270 crore worth of shares at ₹473 and passed. The report doesn't say why.

The only other FY26 equity movement was a trickle of ESOP shares. The company filed its DRHP in September 2025 for an IPO that includes an offer for sale by existing holders.

UnlistedZone's indicative price on 6 September 2026: ₹478. On 14.13 crore diluted shares that's a market cap of about ₹6,750 crore (calc: 12.60 cr equity + 1.53 cr CCPS = 14.13 cr × ₹478).

The Unlisted market is sitting almost exactly on the last institutional round, eighteen months later. The PE investors are roughly flat; anyone who bought at the ₹555 high is down 14%.

At ₹478 (all of these are my calculations, not report figures):

• P/E ≈ 28x (₹6,750 cr ÷ ₹237 cr PAT); ≈32x on the ₹210 crore attributable to shareholders

• P/B ≈ 3.4x (₹6,750 cr ÷ ₹1,993 cr net worth); roughly 4.5x if you strip out the ₹509 cr hedge reserve (₹6,750 ÷ ₹1,484)

• EV/EBITDA ≈ 12x (₹6,750 cr − ₹793 cr net cash = ₹5,957 cr EV ÷ ₹491 cr EBITDA)

• Dividend yield ≈ 1.25% (₹6 ÷ ₹478)

• Apar, for reference: ~60x P/E and ~13x P/B (Screener); EV/EBITDA ≈ 34x (calc: ₹72,946 cr mcap + ₹956 cr borrowings ÷ ₹2,171 cr TTM EBITDA, ignoring Apar's cash)

So the unlisted market values Sterlite at about half of Apar's earnings multiple. Some of that discount is deserved: lower ROCE, a short track record as a standalone company, an unproven working-capital cycle, thin cash generation, and the plain illiquidity of unlisted stock with a six-month post-listing lock-in. Some of it is the opportunity. Illustrative arithmetic, not a forecast: if PAT grows 20–25% in FY27 (₹285–300 crore) and the stock lists at 30–40x, the implied value is ₹8,500–12,000 crore against ₹6,750 crore today. If margins keep sliding and working capital keeps eating cash, 25x on flat profit (₹237 cr × 25 ≈ ₹5,900 cr) lands roughly where the price already is. It's priced for decent execution, not for Apar-like execution.

1. The transmission capex cycle. The report cites ₹4.5–5.5 lakh crore of expected transmission investment over FY26–30: renewable evacuation, Green Energy Corridor, HVDC and 765 kV corridors, all conductor-hungry.

2. Premium conductor mix. AL59 and HTLS earn more per tonne than plain ACSR, and reconductoring existing lines is the fastest way for utilities to add capacity.

3. The cable upgrade. Vadodara moves Sterlite from 220 kV to 400–550 kV cable, where only a handful of Indian suppliers are qualified. Cities, data centres and industrial parks are all going underground.

4. Exports rebuilding. A National Grid (UK) qualification is worth more than its rupee size because it opens other developed-market utilities.

5. Data centres. Convergence is small but grew 36%, and every hyperscale campus needs both grid connection and fibre.

6. The IPO. Liquidity, a currency for growth, and quarterly discipline.

1. Aluminium. Two-thirds of cost. Pass-through clauses are supposed to protect margin, but FY26 shows the lag: raw material up 48% on revenue up 26%. Hedges cover timing, not pricing.

2. Working capital. Net working capital up 57% (₹1,071 → ₹1,686 cr), operating cash flow down 44% (₹647 → ₹359 cr), acceptances at ₹1,476 crore. Growth funded by stretching suppliers and unbilled receivables is fragile if a utility pays late.

3. Returns. ROCE fell from 24.8% to 16.9% (report's consolidated figure). Vadodara has to ramp for that to recover, and a quarter of book value (₹509 cr ÷ ₹1,993 cr = 26%) is a hedge reserve that can reverse.

4. Competition. Apar is larger and better capitalised in conductors; KEI, Polycab and RR Kabel are all adding EHV cable capacity.

5. EPC hangover. ₹500+ crore of legacy MSI packages were closed in FY26. MSI needs to stay small and selective.

6. Concentration. Largest customer only 7.4%, but the customer type is Indian utilities and developers, and exports have fallen from 20% to 7% of revenue.

7. Group and IPO risk. The promoter is a Vedanta-group entity with its own leverage story. The DRHP includes an offer for sale, so early investors are partly cashing out. And a lender declined to put fresh money in at ₹473.

Sterlite Electric gave up its transmission annuity to become a pure supplier to India's grid build-out. In its first full year as that company it grew revenue 26% and profit 30%, kept a net-cash balance sheet, and built a plant that can make the highest-voltage cable in the country. It also lost 170 bps of margin to aluminium, tied up ₹600 crore more in working capital, and saw its return on capital fall by a third.

The real profit is ₹237 crore, not the ₹746 crore that appears on the statement. The last real price is ₹473, set by PE investors in FY25 and left untouched by a lender who could have bought more. The unlisted market says ₹478. Whether that's cheap depends on one thing: can the ₹237 crore grow faster than the ₹6,254 crore did. The hedges buy time. They don't fix pricing.

Sources: Sterlite Electric FY2025-26 Annual Report (consolidated, continuing operations) — P&L and balance sheet p. 238–239, MD&A metrics table, Board's Report share-capital section p. 74–75, shareholding pattern p. 109, Note 17 (borrowings), Note 17.3 (hedge reserve); Screener.in for Apar Industries (price as of 4 Sept 2026); UnlistedZone indicative price as of 6 Sept 2026. Anything marked "calc" is our arithmetic on those figures, not a number the report states. Explainer, not investment advice.