Tejas Networks share price

Tejas Networks Skyrockets 20%: How 4G/5G Demand is Fueling a Massive Q2FY25 Profit Surge!

Tejas Networks, a Tata Group-backed powerhouse in the telecommunications industry, has been making waves with its stellar performance. On October 21, shares of Tejas Networks surged by 20%, hitting a three-month high of ₹1,427. This dramatic rise follows the company’s impressive Q2FY25 results, where it posted a whopping six-times revenue jump to ₹2,811 crore. Tejas Networks is back in the profit game with a net profit of ₹275 crore, a stark contrast from its ₹13 crore loss during the same period last year.

Tejas Networks: Turning Around with Profitability

After enduring nine consecutive quarters of losses, Tejas Networks staged a remarkable comeback in Q4FY24, and the momentum has continued into FY25. The company reported a total net profit of ₹353 crore for H1FY25, compared to a net loss of ₹39 crore in the first half of FY24. This turnaround is largely driven by strong domestic demand, particularly for 4G/5G equipment supplied to Bharat Sanchar Nigam Limited (BSNL).

The company’s Q2FY25 revenue mix tells an exciting story. A staggering 93% of revenue came from India’s private sector, showcasing an impressive 13.7x YoY growth, thanks to BSNL 4G shipments to Tata Consultancy Services (TCS). However, the India-government segment saw a slight decline of 5% YoY, contributing only 4% to total revenue, while international revenue dropped 3% YoY, mainly due to challenges in Africa and South Asia.

The 4G/5G Boom Fuels Growth

Tejas Networks has been ramping up its 4G/5G Radio Access Network (RAN) shipments for BSNL’s pan-India network, with over 58,000 sites now equipped with its technology. The company has also received additional orders to densify its 4G networks in specific regions. Internationally, the company is gaining ground with its GPON and DWDM products, securing new clients in the Americas and Africa, including network modernization projects in the U.S.

Tejas Networks’ order book remains strong, with a backlog of ₹4,845 crore at the end of Q2, including ₹4,627 crore from India and ₹218 crore from international markets. This backlog sets a solid foundation for future growth, as the company continues to capitalize on opportunities in both domestic and international markets.

Eyeing Future Opportunities

Looking ahead, Tejas Networks is poised to seize several key opportunities across both wireless and wireline segments. In the wireless space, BSNL’s 4G expansion, coupled with the anticipated upgrade to 5G, will play a crucial role in driving growth. Tejas Networks is also eyeing projects such as the Indian Railways’ Kavach system—a cutting-edge collision avoidance technology—and private 5G applications for large enterprises across India.

In the wireline segment, the company aims to take advantage of Bharatnet Phase 3 initiatives, expanding DWDM backbone networks for utilities, and pursuing FTTH (Fiber to the Home) contracts in the EMEA (Europe, Middle East, and Africa) region, along with the Americas.

Wealth Creator Over Time

For long-term investors, Tejas Networks has been nothing short of a wealth creator. Over the last four years, the stock has delivered an astounding return of 1421%, skyrocketing from ₹90 per share to its current trading price of ₹1,369. The stock’s largest monthly gain was in April 2024, when it surged by a remarkable 74%.

As a part of the prestigious Tata Group, with Panatone Finvest—a subsidiary of Tata Sons—as its majority shareholder, Tejas Networks continues to build high-performance wireline and wireless networking products for over 75 countries. These products serve a wide range of industries, including telecommunications, internet service providers, utilities, defense, and government entities.

Conclusion

Tejas Networks is on a robust growth trajectory, propelled by strong domestic demand for its 4G and 5G technology and exciting opportunities on the horizon. Its profitability turnaround, impressive revenue growth, and expanding order book are clear indicators of a bright future. With ambitious projects like BSNL’s 5G network and key international contracts, Tejas Networks is set to be a key player in the evolving telecom landscape.