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Tejas Networks Ltd

| Q2 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤17th Oct 25

Summary : Tejas Networks reported a Q2 loss despite revenue growth, citing provisions, while maintaining a bullish long-term outlook on 5G/6G and data center opportunities amidst investor concerns over profitability and guidance.

Management Perspective positive : Our long-term outlook is positive. We are very bullish about the Company's future business. We continue to invest very significantly in R&D and products and also sales expansion because we are bullish about our future.

Concall Report Analysis & Insights

Business Overview

  1. Q2 revenue was Rs. 262 crores, a 30% quarter-on-quarter growth.
  2. Reported a Q2 net loss of Rs. 307 crores, including Rs. 190 crores in provisions.
  3. Order book stood at Rs. 1,200 crores, with 93% from India and 7% international.
  4. BSNL's nationwide 4G network, running on Tejas 4G RAN, was inaugurated across 97,500 cell towers.
  5. Launched new 64T64R massive MIMO radio and completed first 5G RAN deployment for BSNL.

Future Growth Prospects

  1. Management maintains a positive and bullish long-term outlook for the company's business.
  2. Rapid technology transitions and growing data consumption drive new customer opportunities.
  3. Significant investments are ongoing in R&D and sales expansion for 5G, 6G, and optical products.
  4. Expects BSNL 4G add-on purchase orders of Rs. 1,500 crores in the current financial year.
  5. Targeting a meaningful share in the $25-30 billion annual global wireless and wireline market.

Management Insights

  1. Q2 revenue growth was positive, but profitability was significantly impacted by provisions.
  2. Provisions of Rs. 190 crores were made for manufacturing losses, inventory, and warranty.
  3. BSNL 4G add-on orders are anticipated this financial year, though shipments may spill over.
  4. Bullish on future growth driven by technology shifts, AI data centers, and international expansion.
  5. Committed to transparency but does not provide specific quarter-on-quarter financial guidance.

Signs of Skepticism

  1. Recurring negative profitability for several quarters despite management's bullish outlook.
  2. High inventory and receivables are tied to delayed BSNL orders, impacting working capital.
  3. Management's refusal to provide specific breakeven revenue or future financial guidance.
  4. Investor frustration regarding lack of transparency on market share and pipeline data.
  5. Ongoing provisions for inventory write-downs and manufacturing losses raise concerns about operational efficiency.

Risk Factors

  1. Delay in converting BSNL 4G add-on APOs into firm purchase orders.
  2. High inventory levels and receivables contribute to increased borrowings for working capital.
  3. Ongoing provisions for inventory obsolescence, manufacturing losses, and warranty expenses.
  4. Risk of not successfully executing product development plans or succeeding in customer trials.
  5. Intense competition for new opportunities, including within the Tata Group for data center connectivity.

Good To Know

  1. India is now the fifth country globally with a complete 4G/5G technology stack.
  2. Dr. Randhir Thakur, CEO & MD of Tata Electronics, joined the Board as a non-executive director.
  3. Tejas was shortlisted for the '2025 Network X Awards' for its 'Intelligent Alien Wavelength Solution'.
  4. The company filed 39 new patents, bringing the total to 587.
  5. Successfully completed 4G/5G RAN POC in a South Asian mobile operator's network.

Key Drivers

  1. BSNL 4G add-on orders.
  2. Global 5G and 6G deployments.
  3. AI data center connectivity demand.
  4. International market expansion wins.

Key Analyst Discussions

Competitive Environment

  1. Tejas will compete for TCS data center connectivity opportunities against other vendors.
  2. The global wireless and wireline market is estimated at $25-30 billion annually.
  3. Company aims for a meaningful market share but cannot provide specific percentages.

Market Trends & Consumer Behavior

  1. Data consumption, both fixed and mobile, continues to grow rapidly.
  2. AI applications are driving significant traffic growth across networks.
  3. 5G deployment is projected to continue until 2030, with 4G expanding in emerging markets.
  4. Massive investments in AI data centers are creating huge connectivity requirements.

Financial Highlights

  1. Management did not provide a breakeven revenue estimate.
  2. BSNL add-on orders are expected this financial year, but shipments may extend.
  3. Inventory and warranty provisions are ongoing, but large recurrences are not expected.
  4. Profitability on international projects is typically higher than Indian customers.
  5. Investor expressed frustration over consecutive losses and lack of financial guidance.

Product Composition

  1. Deployed 4G network for BSNL, with radios upgradable to 5G.
  2. Developed a new 5G radio portfolio, including massive MIMO, for global markets.
  3. Investing in Open RAN architecture and partnering with NEC and Rakuten.
  4. Launched 1.2 Tbps DWDM system and expanding optical portfolio with 800 gig and 1.2 terabit products.
  5. Developing 50G PON products and data center interconnect solutions.

Strategic Considerations

  1. Engaging with private operators in India and internationally for 4G/5G POCs.
  2. Leveraging new board member's experience for product and supply chain strategy.
  3. Actively participating in global 6G standardization bodies to develop early products.