Tejas Networks – Product based IT business in a favored sector?

Some of the points to ponder upon are:

1. There is no clear visibility of the growth post FY25. Though management has listed following optionalities, the quantum of these opportunities look relatively lower as compared to current BSNL order.

• Optionality 1: The Kavach system. As per the management, this contract/order could be of 15K to 20K sites. If we compare this with the BSNL order then it is hardly 1/5th. Meaning it can translate into orders worth 2K to 3K Cr.

• Optionality 2: The BharatNet Phase3: As per management the total equipment required for this could be somewhere in the range of 4K to 5K Cr. Also the chances are this tender could be allotted to more than 1 player.

Above both orders will have to be executed (if and when it comes) in 18 to 24 months. Thus revenue contribution from these orders would be not more than 2 to 3K per year.

Optionality 3: International business. The management has categorically said that these orders would be much lesser than the BSNL orders. There can be number of orders but the size would be relatively smaller.
Moreover, the company is currently doing POC with the international clients, which are long dated ones and hence it will take some time for the actual orders to come in.

The management has avoided commenting anything on the orders post FY26 and have also avoided commenting on the pipeline as well.

2. Another concerning aspect is the increasing debt because of the stretched WC as they deliver more and more equipment for the BSNL. Already debt increased from 1744Cr to 2844Cr in a quarter and management has indicated that it will increase even more going forward.

Disc: Invested.