TEJASNET - Tejas Networks Limited Share Price

Management's outlook for Tejas Networks indicates a positive shift in FY27 after a challenging FY26 marked by significant losses. For Q4, the company reported revenues of INR 333 crores, up from INR 307 crores in Q3, and a full-year revenue of INR 1,103 crores. However, it also faced a net PAT loss of INR 211 crores in Q4 and INR 909 crores for the year.

Key forward-looking points provided by management include:

1. Order Book Growth: The order book reached INR 1,514 crores by the end of Q4, a notable increase from INR 1,019 crores a year prior, with 83% originating from India.

2. International Deals: Management highlighted recent agreements, including a contract with NEC for 5G Massive MIMO radios, expected to generate revenues in FY27, enhancing their global footprint, especially in wireless segments.

3. AI Traffic Expectations: By 2033, AI traffic is anticipated to exceed 60% of total network traffic, necessitating a transformation in network architectures and an anticipated super-cycle of investment in network building.

4. Equipment Expectations: They predict substantial scaling up of optical solutions and an increase in data center connectivity, targeting multi-terabit scales, which is crucial for future growth.

5. Financial Strategy: Despite the challenges of FY26, management is committed to cost optimization while maintaining R&D investments, indicating a focus on profitability and improved financial performance in FY27.

6. Long-Term Vision: Management expressed confidence in the company's strategic partnerships and product roadmap to leverage future opportunities in a rapidly evolving technological landscape.

The company aims to achieve better financial outcomes in FY27, focusing on consolidating its market position and capitalizing on emerging trends in network infrastructure.

Question 1: "In February, we got a Massive MIMO deal for 5G networks and also a deal for 4G network in South Asia. Is there any data to quantify these orders or deals?"

Answer: We typically do not disclose specific deal numbers. However, we expect a significant portion of revenue from the 5G Massive MIMO business in FY27. Some revenue from the 4G deal has already occurred, and we anticipate further expansion this year. Beyond that, we refrain from sharing detailed deal-specific numbers.

Question 2: "Regarding the BSNL additional PO of 18,000 sites, is there any update on that?"

Answer: Active discussions with the BSNL team are ongoing regarding the configuration of the 4G sites. We're prepared with inventory to ensure a quick turnaround upon receipt of the PO. Once received, delivery times will be significantly shorter than previous orders, as the sites are now commercial and tested.

Question 3: "Does the INR1,500 odd crores order book include the BSNL 4G project?"

Answer: No, the order book does not include the BSNL 4G project. This figure represents orders from our customers in India and internationally for wireline and wireless products, excluding the BSNL contract.

Question 4: "How much impact does the rise in memory prices have on our product margins?"

Answer: The increase in memory costs does affect our margins, but it is a minor component of our overall cost structure. We are renegotiating costs with suppliers to mitigate margin pressures from various components, but memory's small percentage means the overall impact is manageable.

Question 5: "What is the guidance for FY27 revenue growth and margins?"

Answer: We have a positive outlook for FY27; however, we do not provide specific financial number guidance. Our focus remains on ensuring investments yield better financial results while optimizing costs based on business progression.

Question 6: "The increase in intangibles under development appears related to product development and technology licensing. Is that correct?"

Answer: Yes, the increase primarily reflects our ongoing product development efforts and costs linked to technology licensing agreements, which will be capitalized over time as we achieve commercialization of our innovations.

Question 7: "When can we expect revenue from the technology agreement with NEC?"

Answer: We expect to see revenue from the contract with NEC during FY27, corresponding with our supply of Massive MIMO radios, marking a significant milestone in our partnership.

Question 8: "Given the current financial situation, is breakeven expected in FY27?"

Answer: That is indeed the goal. We strive for a turnaround in FY27 due to our investment strategies and a more streamlined cost structure, aiming for improved financial performance.

Question 9: "Can you clarify the company's position on cash generation and the sustainability of debt-funded intangible assets?"

Answer: While we recognize the importance of balanced investments, we've opted to proceed with R&D funding to support our technological advancements. In FY27, we will closely monitor these investments against revenue growth, ensuring they align with business opportunities without compromising our financial health.

Question 10: "Will the inventory and receivables improve in FY27?"

Answer: We anticipate significant collections from BSNL in FY27, which will reduce receivables, while inventory consists of products applicable to various customers, allowing for flexible utilization beyond just the BSNL projects.