Sterlite Power: Can This Power Giant Electrify Your Portfolio?

Summary

Sterlite Power is a leading transmission infrastructure player with strong project execution in India and Brazil, but its financials remain volatile with recent losses and delayed IPO plans. While the business benefits from sectoral tailwinds, investors may want to wait for more consistent performance before entering at current unlisted valuations.

In a world racing toward green energy and digital infrastructure, Sterlite Power Transmission stands at an interesting crossroad. With ambitious projects in India and Brazil, strong industry tailwinds, and a strategic business model, the company appears well-positioned for the future. But dig a little deeper, and you'll find financial volatility and structural risks that may give long-term investors pause.

In this article, we will break down Sterlite Powers business, financial performance, peer comparison, IPO status, and whether this unlisted company deserves a spot in your portfolio.

Business Overview

Sterlite Power is not just another infrastructure company — it operates in the backbone of India’s power grid. It’s a leading global developer of power transmission infrastructure, working across three key business segments:

1. Infrastructure Business

This is the company’s core: designing, constructing, and operating transmission projects. Sterlite is known for completing projects faster than industry benchmarks and uses platforms like IndiGrid for asset monetization.

• Indian Portfolio: 20+ projects spanning over 11,000+ circuit km, with a capital expenditure (CapEx) of ₹26,000 crore.
  
  

• Brazilian Portfolio: 13 projects covering 5,000+ circuit km, with Capex of ₹11,000 crore.
  
  

2. Solutions Business

Focused on upgrading and strengthening existing power networks. It addresses space constraints and regulatory hurdles using in-house engineering and tech solutions.

3. Convergence Business

Utilizes power transmission infrastructure to build fiber optic telecom networks, supporting India's Digital India mission.

Across India and Brazil, the company currently has 33 active projects worth over $2 billion, and a total asset portfolio of ₹42,000 crore (as per FY24 data).

📊 Financials – A Mixed Bag

Sterlite Power’s top line has seen spurts of growth, but profits have been far from stable. Let’s look at key financials from FY20 to FY24:

• In FY20 & FY21, both revenue and profits declined.
• FY22 saw a 148% revenue jump, but profits still dipped due to a 130% surge in costs
• FY23 was flat-to-negative across revenue, EBITDA, and PAT.
• FY24? Revenue and EBITDA improved, but PAT took a nosedive from ₹-33 crore to ₹-217 crore,

So, while topline is growing, the bottom line isn’t keeping up. Brazil ops and cost pressures are major culprits here.

Key Financial Ratios

Despite improving revenue, return metrics have been consistently weak, and debt levels are moderate but rising — something to monitor closely.

Where Does It Stand Vs Peers?

Sterlite Power competes with listed players like Power Grid Corporation, Adani Power, and Tata Power.

Sterlite is lagging significantly in profitability and efficiency. Its only standout metric has been sales growth, which hasn’t yet translated into consistent bottom-line performance.

Promoter & Ownership Structure

• Twin Star Overseas Ltd (Sterlite’s holding entity): 71.34%
  
  

• Promoter Group (Vedanta Group + Mgmt): 2.64%
  
  

• Public/Institutions (FPI, Banks, Corporates, NRIs): 26.02%
  
  

Strong promoter backing from the Vedanta Group inspires confidence, but concentrated ownership also limits investor influence.

IPO Status

Sterlite Power filed its Draft Red Herring Prospectus (DRHP) with SEBI in 2021 for an estimated ₹1,250 crore IPO. However, it postponed the plan in 2022 due to market volatility and regulatory hurdles.

Since then, no update has been made on IPO timelines — raising questions about capital strategy and investor sentiment.

Awards & Recognition

Sterlite Power has won multiple accolades:

• Company of the Year – ET Energy, 2023
  
  

• Most Admired Company – ET Edge, 2023
  
  

• Best in Industry (Energy, Oil & Gas) – 2024
  
  

These awards signal strong brand perception and execution capabilities.

Risks to Watch

1. Financial Volatility: PAT fluctuations raise sustainability concerns.
   
   

2. Brazil Exposure: International operations have introduced FX and project execution risk.
   
   

3. High CapEx Model: Working capital pressures and liquidity constraints can emerge quickly.
   
   

4. Commodity Price Risk: Raw material volatility affects margins.
   
   

Should You Invest?

Currently, Sterlite Power’s unlisted shares are trading around ₹498/share, at its 52-week low. Given the company’s:

• solid infrastructure footprint,
  
  

• high growth sector alignment,
  
  

• but weak financial consistency,
  
  

…it's a wait-and-watch candidate rather than a strong buy.

Investor Verdict- 

If you have a long-term horizon and high risk appetite, Sterlite Power could be worth tracking, especially if it moves toward an IPO. But for conservative investors, it's wise to wait another 1–2 years to see how the company stabilizes its margins and returns to profitability.

For those interested in unlisted share investing, platforms like Sharescart.com can help access companies like Sterlite Power before they go public.

Disclaimer: This article is for informational purposes only and not investment advice. Always do your own research or consult a financial advisor before investing in unlisted securities.