10.Top Multi bagger tip: Futuristic & Fundamental: Sterlite Technologies.

Every Stock Market Investor around the world ranging from Warren Buffet to Ramdeo Aggarwal is looking for a futuristic idea and concept that they trust in. They are looking to create value rather than money.

I have found one such script, which I have placed my trust in............


Optical communications systems have a long history. Ancient man signalled with smoke and fire, often relaying messages from mountain top to mountain top. However, this optical communication scheme had limited transmission capacity. They could serve as a warning, as Queen Elizabeth the First of England planned when she had a network of bonfires erected to be set in the event of a seaborne invasion from Spain. The smoke signals transmitted by native Americans had the capacity to transmit various messages. Since the end of the eighteenth century messages have been passed by semaphore – the use of flags to indicate the transmission of one letter at a time. This form of communication could transmit information at a rate of about one letter per second over a direct line of sight, although messages could be relayed over long distances. Such means of communication were not very secure: anyone in the line of sight to the message sender could read the information (if he knew the code). The message could also be intercepted and altered during the relay process as the Count of Monte Cristo did to his advantage .
One Word: OPTICAL FIBRE

Benefits over Copper

Decoding this equation into simpler terms, Optic Fibre is preferred over Copper Wire thanks to the following reasons:-

Scalability

Optical fibers have very large Potential capacity. Lit capacity, the amount of capacity that is installed actually running over the cable, is by installing transmission equipment based on the present needs and equipment with additional capacity added in step with the increasing demand.

High Speed

Optic Fibre can support Internet speeds up to several Gbps (thousands of Mbps) and the speed is the same for multiple users in the same area.

Multiple Users & Devices

Optic Fibre can support multiple devices simultaneously. Its USP is the speed doesn’t drop even when multiple devices are operating at the same time.

Broad Bandwidth

A single Optic Fibre can carry more than 3,000,000 full-duplex voice calls or 90,000 TV channels.

Immunity to Electromagnetic Interference

Light transmission via Optic Fibre is unaffected by other nearby electromagnetic radiation. Being electrically non-conductive, Optic Fibre does not act as an antenna to pick up electromagnetic signals. Information travelling inside the Optic Fibre is immune to electromagnetic interference.

Low Attenuation Loss over Long Distances

With the present technology of low attenuation loss in Optic Fibre cables, transmission is viable over long distances without the need for repeaters.

Electrical Insulator

Optic Fibres do not conduct electricity, preventing problems with ground loops and conduction of lightning. Optic Fibres can be strung on poles alongside high-voltage power cables.

Material Cost and Theft Prevention

Conventional cable systems use large amounts of copper. Global copper prices experienced a boom in the 2000s, and copper has been a target of metal theft ever since.

Security of Information

Unlike copper, Optic Fibre cannot be tapped without physical intrusion which is easily detectable. 

( apart from communication Optical fibre has massive application in efence technology, mining, space sciences etc.

Cutting forward to 2017,

On March 3, finance minister T.M. Thomas Isaac set aside Rs 1,000 crore in the 2017 budget to establish a Kerala Fibre Optic Network (K-FON)-150,000 km of optical fibre cables running parallel to the state's power transmission and distribution network to bring free Wi-Fi to the people. 

Spectranet is planning a major expansion of its Optical Fibre Cable-based internet services in its current cities of operation. The internet service provider (ISP) is investing upwards of Rs 100 crores for laying out Optical Fibre lines in 8 Indian cities including - Delhi, Gurgaon, Ghaziabad, Noida, Mumbai, Bengaluru, Pune and Chennai. broadband providers like ACT Fibre, Airtel with its V-Fibre and Reliance Jio with its Fibre to The Home (FTTH) are ramping up expansion plans as well. While Airtel's V-Fibre has hit 8 cities as of now, Jio is still testing its network in Mumbai, with reports of a few areas having preliminary access to the service. 

Average data traffic per active smartphone is expected to increase five-fold from 1.4 Gigabyte (GB) per month in 2015 to 7 GB by 2021. A Fibre optic based tecnology called LTE-Advanced (LTE-A), carrier aggregation and densification of small cells have all emerged as important industry solutions to meet the requirements of providing strong network coverage. 

Malaysia is emerging as a key investor in India's infrastructure sector, and a few big-ticket investments are in the pipeline for announcements during Razak’s visit. This include $1.2-1.4 bn worth road project in Rajasthan and $300-400 million worth optical fibre project in Karnataka. - 

These data highways can provide many services to remote places, such as telemedicine, e-education, e-governance and ecommerce, among others, and can transform the economy. Worldwide,​ it has been accepted that often the amount of bandwidth needed is inversely proportional with a level of literacy and hence even people in villages will benefit from high bandwidth connectivity. 

UCWeb, a subsidiary of China’s Alibaba Group, announced early last month that it is looking to make inroads in India by offering subsidised or even free internet access to Indians. Jack Huang, President of Overseas Business, Mobile Business, Alibaba UC, indicated that the company was in talks with various service providers and Wi-Fi providers to bring lower data costs, better internet connectivity, and maybe even free internet to India.Facebook last year attempted to launch a “free” internet programme in India called Free Basics. Ostensibly, Free Basics was to offer free internet to India’s citizens. In reality, however, Free Basics intended to allow users access only to certain sites, curated exclusively by Facebook.Google, however, took a better approach with its RailWire project. It simply worked with the government to offer free internet to anyone who could access a RailWire hotspot. 

Around 1,893 mobile stations are expected to cover all the villages which do not have mobile coverage yet in Arunachal Pradesh. Highways will also be covered under the CTDP project. In order to strengthen the telecom network of inter-district connectivity and to promote the Digital India Vision, 1,510 km of optical fibre cable will also be laid this year, work for which has already begun. 

Jabalpur and many other cities are looking at significant investment in optic-fibre cable. Electricity companies also extensively use optical fibre cables for monitoring and control purposes. Sterlite Technologies, which has a 40 per cent market share in the domestic optic fibre/cable space, is expected to benefit from such projects. -( I wanted to give up the name after creating little suspense but...)

The central government has BharatNet’s optical fibre network expected to be completed by 2023 and the Telangana government has their own optical fibre laying project expected to be completed by 2018. 

Digital India: All gram panchayats to be connected through Optical Fibre Cable by 2018-end

As of now, Optical Fibre Cable (OFC) has been laid to 76,089 gram panchayats with a total length of 1,72,257 kilometres.

Modi said there was need for I-ways apart from highways and his government would lay a network of optical fibre in the country. Criticising the slow pace of laying of optical fibres under the previous regime, the Prime Minister said sadly fibre network could be laid only in 59 villages as against their target of 1.25 lakh villages."The present government will lay optical fibre network in 2.5 lakh panchayats and work has been completed in 68,000 villages," he said.  

It seems I have already giveen up the name. Yeah, so it's Sterlite Technologies.

Futuristic & Fundamental: Sterlite Technologies: 

CMP: 131.85 Target: 185 rs. ( till DIWALI 17) ( but please hold for super long time, up to follow the Eicher Motors Way.)

BACKGROUND: 

Basically, I wanted to accumulate this script and hold shares worth lakhs or even crores before it would rally upwards. But, following the announcements of JIO, BharatNet, Digital India, Defence upgrade the share rallied excessively (especially after 10000 cr allocation for bharatnet at the budget) so I decided to buy excessively on Diwali Muharrat session ( CMP was 102 rs.) 

( screw you Modi for developing India so fast before I couldnt buy Sterlite worth crores. Just kidding, I love Modi.)

Who better than the Market leader? Yes, it is the market leader in India (40% Market share) and one of the best in the world.

I think this is the beginning of another such rally. 

Guys, look at the fantabulous results.....

Sterlite Tech Posts 63% Net Profit Growth in Q3FY'17; Sales Cross 100 Countries

- Strong Operating Performance With Revenue up 23% and PAT up 63% vs Q3FY'16 

- Robust Organic Growth in International Business, Exports up 74% vs Q3FY'16 

- Highest Ever Order Booking in a Quarter for Product Business Over Rs 1,000 Crore 

Sterlite Technologies Ltd [BSE: 532374, NSE: STRTECH], a global technology leader in smarter digital infrastructure, posted strong operating performance in Q3FY'17. With over 130 patents in optical communication products, system & network integration services and software solutions, Sterlite Tech posted the highest ever EBITDA at Rs 145 crore, up by 26% Y-o-Y. Revenues were up by 23% and PAT up by 63% this quarter, as compared to the corresponding quarter, last year.

With strong organic growth in international business, Sterlite Tech crossed the milestone of transforming digital infrastructure in over 100 countries. The company achieved highest ever fibre volumes, and exited Q3 with optical fibre sales at annualised run rate of over 27 million fkm. The quarter also saw highest order booking in the products business at Rs 1,000 crore.

Financial Highlights for Q3FY'17 (Consolidated - All figures are in Ind AS & Rs crore)

Sterlite Tech has posted strong business growth with annual revenue and EBITDA growing at a CAGR of 28% and 36% respectively, over the past four years. For this quarter, major financial highlights were:

• Quarterly revenues at Rs 732 crore, up 23% vs Rs 596 crore Y-o-Y.
• Highest ever EBITDA at Rs 145 crore, up 26% vs Rs 116 crore Y-o-Y.
• Profit After Tax stood at Rs 49 crore, up 63% vs Rs 30 crore Y-o-Y.
• International sales increased to Rs 284 crore in Q3FY'17 from Rs 163 crore in Q3FY'16. Currently, exports are contributing to 39% of revenues.
• The ROCE of the business stood at 22% and ROE at 25% 

The company has a capacity of 20.0 million (mn) km in the optic fibre space out of which 4.0 mn km is in China. Sterlite was able to produce 5.5 mn km of fibre in Q4FY16 through de-bottlenecking, which implies a yearly fibre production of 22.0 mn km. Going ahead, the company intends to ramp up production by 10.0% each year by investing about | 120-130 crore and maintained that there would be no greenfield capacity expansion in the near term. The optic fibre segment is the highest margin segment in the company’s portfolio of products and services. The fibre earns an average realisation of ~$7 per mn fibre km and has a margin profile of ~30-35%. The in-house manufacturing gives the company an edge over its competitors not only in terms of lower costs for the cable but also for value added products.  

SHOCKER: THE COMPANY HAS ACQUIRED 140 patents!!!!!!! YOU HAVE NO IDEA WHAT 140 PATENTS MEAN.

Every company, anywhere around the globe is plannin to do something revolving around optical fibre, it has to pay royalty to STERLITE. This company has baffled the fundamentals of giganteous US,Europe and Chinese companies. They are literally shocked, everyone wants a part of our STERLITE, an Indian firm.

Government projects like National Optical Fibre Network (NOFN) intend to connect 250000 Gram Panchayats laying 0.5 mn km of optic fibre cable. This would entail cable laying of ~20-24mn fkm over the next two to three years and is one of the major opportunities for Sterlite over the medium and long term. Furthermore, the entire Digital India project brings with it an opportunity of ~| 70000 crore with Smart Cities bringing in an additional opportunity. Private telecom operators, put together, have earmarked ~$3.6 billion fibre network deployment capex outlay over the next three years. Sterlite has been a vendor to telcos over the past decade and has been meeting above 90% of the fibre/cable requirements of some of the players in the industry. Hence, it would continue to be a beneficiary of such an outlay. 

Expanded services portfolio with Elitecore acquisition  ( STERLITE acqired elitecore recently)

The services segment accounts for ~28% of the overall topline of Sterlite Technologies. The management remains extremely bullish on the growth prospects of the services pie. The company has, thus, strengthened its services offerings with the acquisition of telecom software services company Elitecore Technologies, a pure play business support and operations support systems player, for an enterprise value of | 180 crore. Post the acquisition, the services portfolio is now inclusive of both solutions and software offerings in terms of network integration (NI), system integration (SI), operating support software (OSS), business support software (BSS), etc. Elitecore has a rich product portfolio, robust technology platform, strong customer track record and excellent partnerships. Over the last few years, Elitecore has made significant inroads among both Indian and global telecom operators and expanded its geographic footprint to include South East Asia, Middle East & Africa and lately, Eastern Europe and Latin America. It serves as a very good entry in the OSS/BSS space and the wider telecom software space. Elitecore is servicing 11 out of the top 30 telco players. This will help Sterlite develop synergies and cross-sell its products. Exhibit 4: Elitecore. There have been tremendous opportunities in the solutions business. The company received an order worth | 1500 crore from BSNL to execute a network for spectrum (NFS) order for Jammu & Kashmir. Sterlite is also contracted to maintain the same optic fibre network over the next seven years, which will fetch them | 500 crore. Out of the total order of | 1500 crore, | 1200 is attributable to the services segment. The management believes more such wins would augur well for the company.

Demerger of power business to unlock value from telecom business.

The performance of the telecom business was weighed down by the weak topline growth of the power business and high leverage. Post the demerger, there has been significant de-leveraging of the balance sheet. This will, in turn, lead to interest cost reduction and higher profitability. 

TECHNICAL ANALYSIS:

Stock price has surpassed the crucial triple top resistance placed around 130 on weekly charts. 

• Stock has also broken out from the ascending triangle pattern on the weekly charts, with higher volumes 

• 100 Week EMA has been acting as a strong support for last 12 months. 

• Higher Tops and higher bottoms are well intact on the weekly and Monthly charts. 

• Oscillators like MACD and DMI have turned bullish on the weekly charts • Short term moving averages are trading above long term moving averages. 

• Considering the technical evidences discussed above, we recommend buying the stock between CMP and 132, for the targets of 150 and 172, keeping stop loss at 118 on closing basis.

Back to fundamentals,

RJIO has also deployed highest numbers of 96 fibres and 288 fibres in their cable infrastructure which other operators are quite hesitant to deploy. While other operators are content by deploying just 30-50 Km of fibre cable per day on a PAN India basis, RJIO is challenging the norms by targeting 150 – 200Km of fibre cable per day. The strategy is simple and vision is clear – Invest and create a sustainable fibre network today and reap the recurring benefits in the coming years. Today’s consumers are SMART and spoilt for choices. Loyalty is dependent on consumer satisfaction, quality of services and Wow factor. In line with the movie theme, the consumer voices are asking operators to set the playground and let them enjoy high-speed data experience. 

-Tushar Belwal Chief Manager-Application Engineering Telecom Products & Solutions, Sterlite Techologies.

Other massive opportunity: OPTICAL SENSING INSTRUMENTS

Many of the newly proposed smart cities in India are Greenfield. In retrofit cities it is difficult to work out on monitoring of existing infra but in new cities it becomes quite easy to deploy the fibre along with deployment of existing infrastructure. In some case wireless sensors are also used in multiple applications of Smart cities but continuously powering them is big constraint, and putting these sensors across 100 Km of infra is not pragmatic. Major implementation areas can be bridges, buildings, tunnels, wind turbines, Railway infrastructure, upcoming bullet trains project and utility pipelines in India. Applications Fibre optic sensors are used in several areas such as 

• Measurement of physical properties such as strain, displacement, temperature, pressure, velocity, and acceleration in structures of any shape or size. 

• Monitoring the physical health of structures in real time. 

• Buildings and Bridges: Concrete monitoring during setting, crack (length, propagation speed) monitoring, pressurising monitoring, spatial displacement measurement, neutral axis evolution, long-term deformation (creep and shrinkage) monitoring, concrete-steel interaction, and post-seismic damage evaluation. 

• Tunnels: Multipoint optical extensometers, convergence monitoring, shot Crete / prefabricated vaults evaluation, and joints monitoring damage detection. 

• Dams: Foundation monitoring, joint expansion monitoring, spatial displacement measurement, leakage monitoring, and distributed temperature monitoring. 

• Heritage structures: Displacement monitoring, crack opening analysis, post-seismic damage evaluation, restoration monitoring, and old-new interaction. 

The current government has envisioned having 100 Smart Cities across 21 States within the next 5 years. The Cabinet has approved Rs. 48,000 crore for the Smart Cities Mission and Rs. 50,000 crore for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) which involves upgrading another 500 cities to the standard of a Smart City.

Sterlite has done a comprehensive study of the on-going projects like Dholera, Naya Raipur Development Authority (NRDA) and Vizag which are still in the consultancy selection phase and have importantly pointed out several variations which would in turn affect the development and operations in these cities. The transmission sector is growing at 25% again due to 3G and 4G implementation.

According to the findings of the study conducted, in the current scenario, most of the Request for Proposal’s (RFQs) which have been put out for enlisting consultants for developing the architecture for these cities have a lot of inconsistencies and varied requirements even in small areas like Utilities. The same applies to the rest of the areas like public transport and security, smart transport management, waste, energy, healthcare, etc. as well. As a result, every smart city, every Original Equipment Manufacturer (OEM) and every consultant today has a different functionality understanding and hence the need of a different ecosystem for final delivery. The company is a strong proponent of Digital India. The company has envisioned a high speed broadband of the smart cities. Thus as of today, no smart city - not just in India, but across the globe is completely defined or standardized.

Coming to my favorite Cheat code : PATENTS ( this is very Interesting)

Most technology companies consider patent infringement risks as rare occurrences and prefer to adapt an ostrich approach by keeping their heads buried in the sand. Dr. Badri Gomatam, Sterlite's Chief Technology Officer says that this approach has worked well in past till Indian companies were mostly India-centric and India was not an attractive market for foreign companies. Not Anymore! Ground realities are changing at an unimaginable speed.. Xiaomi’s breakneck expansion into the world’s fastest growing smartphone market, India, has been disrupted by the litigation filed by the Swedish equipment maker Ericsson in the Delhi High Court. The court ordered an interim ban and then royalty deposition of 100 INR for every smartphone imported into India by Xiaomi. Homegrown handset maker Micromax was directed by the Delhi High Court in an interim order, to pay 0.8% to 1.3% of the selling price as the royalty to Ericsson for using Ericsson’s Standard Essential Patents (SPEs) on technologies used in smartphones. Other homegrown manufacturers like Intex and Lava too are dealing with patent infringement issues in various forums such as Courts and Competition Commission of India (CCI). Recent patent infringement litigations in India indicate even homegrown companies, in the worst case, are not able to access their domestic markets and in the best case, end up paying royalties enough to put their margins under severe pressure. Unfortunately it is not only patent infringement risk that can adversely impact bottom line, a patent infringement litigation itself, whether or not there is infringement of patents, can dent bottom line by up to 2.5 million INR in India and around 2 million USD in USA. Patent regime is India is already tightening. India becoming attractive market for foreign companies, ‘Make in India’ campaign and pressure from developed economies will have a multiplier effect. Despite extremely protective Chinese government, Chinese companies are facing an explosion of patent litigations in China and in overseas markets. 7,800 litigations were filed in China alone in 2010. China found the answer in the old saying - “the best defense is offence”. In 2011 China surpassed the U.S. in quantity of patent applications. In 2013 China was 300,000 patent applications ahead of its closest competitor USA. Investment in developing a patent portfolio having Mousetrap Patents is similar to buying an insurance policy against patent litigation risk. Patent litigation risks can arise from a well thought out strategy by a competition who intends to penetrate the market by scaring off your customers. Like natural calamities, patent litigation risks can arise from most unlikely corners in most unlikely times derailing business plans in most unlikely ways. Only option against natural calamities is to be aware, to be prepared and to have an insurance to take care of the consequences. Similarly, accepting the fact that possibility of patent litigation risk is increasing for all mid-to-large sized technology product companies with each passing day, and building a targeted and tailor made offensive patent portfolio is an effective and sustainable way forward. A few technology product companies in India like Sterlite Technologies are leading the way in India with a patent portfolio of around 100 global patent publications. This company is also the key research driver in the nation. Every other company actually pay royalty to STERLITE.

AWARDS:

Sterlite Tech won Amity Global Business School CSR Award for Best CSR Practices. Sterlite Tech wins the Lokmat Corporate Excellence Award for Best CSR Practices. Sterlite Tech wins Aegis Graham Bell Award for ‘Innovation in Telecom Infra. Sterlite Tech features among '100 Best Companies to work for Women in India. Sterlite Tech wins Telecom Leadership Forum Awards for transforming the Broadband infrastructure space. Sterlite Tech wins 2 Frost & Sullivan 2016 Awards. Top 25 Innovative Organisations of India – CII. Sterlite Tech wins prestigious Frost & Sullivan Indian Manufacturing Excellence Gold Award 2015. AEGIS GRAHAM BELL AWARD. op Telecom Cable Company 2016. Best Innovation in Fibre Infrastructure 2015 and many such awards ( I got bored of typing.)  

MANAGEMENT: 

This company is the dream baby of Anil Aggarwal, yes, THE ANIL AGGARWAL. For those who don't know who is Anil Aggarwal, he is 14th richest man of India ( keeps on changing due to changing stock prices and his charity work.

Vedanta's Anil Agarwal pledges 75% of his $3.3bn wealth to charity

 Metal trader turned mining tycoon Anil Agarwal surprised the City of London on Wednesday night with an audacious $2.44-billion share purchase in Anglo American — one of the world's top five miners and owner of the largest diamond producer, De Beers. He is one the shrewdest bussinessman of this country. The above stake bought by him was actually a plot to get on the board of Anglo American and get upper hand information for techologies surrounding mining of precious stones, metals and rhodium.

If you are still unconvinced, visit https://www.sterlitetech.com/board_of_directors. The board is full of CA, CS, IITians and MBAs from IIM, LSE, LSB, Wharton.

They are excessively involved in Smart city development and consultancy (gandhinagar is their brain child), softwares, etc. Also, they have an upcoming broadband service:

Sterlite Ultranet brings the "Fibre to the home" experience, commonly known as FTTH with an ultra-speed broadband. It will enable you to work online at speeds that were deemed impossible with the internet. You will be able to enjoy the benefits of high-speed fibre broadband, superior quality HD TV, 3D gaming, movies-on-demand, high-tech security surveillance systems and much more. Your home will be so intelligent and intuitive; you’ll wonder how you ever lived without it. Sterlite Ultranet is a FTTH technology solution provided by Sterlite Tech.

This company is exposed to institutional investors with 40 MFs, 71 FIIs and 31 financial firms/ banks invloved but it is not saturated yet.

SORRY for making the answer boring and long. But I absolutely love this company, couldn't help!

• UNINTERRUPTED DOWNLOADS

  Fibre gives you Download: Upload speed ratio of 2:1 as compared to traditional connection which provides Download: Upload speed ratio of 8:1.