Tejas Networks shares soar 20% to 3-month high on stellar Q2 numbers, up 1,400% in 4 years

Shares of Tejas Networks, a Tata Group-backed company, surged 20% in early morning trade on Monday, October 21 to their three-month high of ₹1,427 apiece. This sharp rise follows the company's impressive Q2FY25 numbers, which were released after market hours on Friday.

The company reported a six-times jump in consolidated revenue from operations at ₹2,811 crore in Q2FY25 compared to ₹396 crore during the same period last year. It posted a profit after tax (PAT) of ₹275 crore, a significant turnaround from a net loss of ₹13 crore in Q2FY24.

After nine consecutive quarters of net losses, the company returned to profitability in Q4FY24 and has maintained this momentum, reporting a net profit of ₹353 crore for H1FY25, compared to a net loss of ₹39 crore in the same period last fiscal year.

In the September quarter, Tejas Networks' revenue mix was primarily driven by India's private sector contributions, accounting for 93% of total revenue, a significant 13.7x YoY growth, largely due to BSNL 4G-related shipments to TCS. In contrast, the India-government segment contributed 4%, reflecting a 5% YoY decline, while international revenues comprised 3%, marking a 3% YoY decline, mainly from key shipments to Africa and South Asia.

The company ramped up 4G/5G RAN shipments for BSNL's pan-India network, having cumulatively shipped equipment to over 58,000 sites. It also received additional orders for densification of installed 4G sites in select circles. Internationally, Tejas Networks saw strong traction for its GPON and DWDM products, securing new customer wins in the Americas and Africa, including an initial order for network modernisation in the U.S.

At the end of September quarter, the company's order backlog stood at ₹4,845 crore, with ₹4,627 crore from India and ₹218 crore from international markets, as per the company's Q2 investor presentation. 

Looking ahead, the company is focusing on several key opportunities across both wireless and wireline segments. In the wireless sector, the company is poised to benefit from the expansion of BSNL’s 4G network and the subsequent upgrade to 5G.

Additionally, it is targeting projects such as the Indian Railways' Kavach system, a collision avoidance technology, and private 5G applications for large enterprises in India.

In the wireline segment, the company aims to capitalise on Bharatnet Phase 3 initiatives and the expansion of DWDM backbone networks in the utilities sector. Furthermore, the company is pursuing FTTH (Fiber to the Home) and network modernization contracts with various operators in the EMEA (Europe, the Middle East, and Africa) region and the Americas.

These strategic initiatives position Tejas Networks to leverage significant growth opportunities in the evolving telecommunications landscape.

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Over the last four years, the stock has delivered an impressive return of 1421%, rising from ₹90 per share to its current trading value of ₹1,369. Notably, in April, the stock recorded its largest monthly gain, soaring by 74%.

Tejas Networks is a part of the Tata Group, with Panatone Finvest (a subsidiary of Tata Sons) being the majority shareholder. It designs and manufactures high-performance wireline and wireless networking products for telecommunications service providers, internet service providers, utilities, defense, and government entities in over 75 countries.

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