Tejas Networks Ltd (TEJASNET) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Your passcode has been confirmed. Please wait while you are joined to the conference. The conference is now being recorded.
Moderator (Emkay Global Financial Services Limited): Ladies and gentlemen, good day, and welcome to Tejas Networks Q2 FY '27 earnings conference call, hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aaryan Tripathi, Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Aaryan Tripathi (Emkay Global Financial Services Limited): Good evening, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Anand Roy, Managing Director and Chief Executive Officer; A. V. S. Prasad, Chief Financial Officer; Dr. Kumar N. Sivarajan, Chief Technology Officer; Preetha Muthayya, Chief Operating Officer; and Sanjay Malik, Chief Strategy and Business Officer. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Anand Roy (Tejas Networks Ltd): Thank you. Good evening, and welcome to the Tejas Networks earnings call of Q2.
Anand Roy (Tejas Networks Ltd): like to start with the summary of the quarter. We ended with a revenue of 406 crores as opposed to 257 crore on a on a year-on-year basis. The profit after tax was a loss of 207 crores, which was an improvement from minus 307 crores of Q2 of FY 26. And order book at the end of the year was at the end of the quarter was 2,315 crores. From a revenue, which is compared to Q1, Q1's order book was 1,500 crores. From a revenue mix, India was 88% compared to the international revenues of 12%. And from order book mix, it was 96% of India and 4% of international, and the key reason was because of our order book being it was a receipt of the LoI and subsequent POs for 18,000 plus 4G sites for the BSNL 4G network expansion, and that's the reason why the India component of the order book went up substantially. The Q2 revenues were driven by shipments of optical IP and FTTH products to private operators and system integrators. And we also started the initial shipments of the BSNL expansion order. We also did initial shipments of our end-to-end 5G solution to an international customer in South America. This is a business that we had won last quarter, and we started our shipments in this quarter. We filed 26 paid patents in in Q2, taking our global patent filing count to 748. I'll now hand it over to our CFO to take us through the the numbers.
A. V. S. Prasad (Tejas Networks Ltd): Good evening, everyone. The Q2 FY '27 revenue from operations is around 406 crores compared to Q2 of 260 262 crores in FY '26, an increase of around 55%. The improved scale reflects the continued recovery in terms of business performance. And at H1 levels, compared to 459 crores in H1 FY '26, we are at 808 crores. This growth represents approximately around 74% year-on-year growth. At the EBITDA level, compared to 293 negative in Q2 of FY '26, we are at 108 crores in the current quarter. And at the PAT level, compared to 307 crores in Q2 FY '26, we're at 207 crores. In terms of revenue comparison against Q1 FY '27, we are at against 402 crores of revenue, we are at 406 crores. And at the EBITDA level, compared to last quarter EBITDA of 99, we're at around 108 crores. In terms of the the balance sheet items, the net working capital compared to Q1 is lower at 4,235 crores. This reduction in terms of working capital significantly is on account of lower trade receivables, on account of increased collections, and also as a business, we do non-recourse bill discounting and also which also has customer advance settlements, which happens on a on a regular basis. The reduction is on account of increased collections and non-recourse discounting. In terms of inventory levels, compared to 2,358 crores, we are at around 2,314. The the high levels of inventory we expect the significant portion of the inventories would be utilized in executing the BSNL 4G order in the coming quarters, for which the deliveries have already started in Q2. At the net debt position, compared to the of 4,277 in Q1, the debt has increased to 4,384 crores. This increase is on account of continued investments in terms of CapEx at Tejas as per the as per the plan, and also in terms of the increased operational, and funding of the increased operational cost.
Anand Roy (Tejas Networks Ltd): Yeah. Thanks, Prasad. Now that for some more commentary on the quarter, a few business update updates are as follows.
Anand Roy (Tejas Networks Ltd): For the wireless business, the most significant thing as you mentioned, was the, receiving the LOI for 18,685 sites for which we have started shipments. And, the, the shipment of, the end-to-end 5G mobile network. We, did the initial RAN shipment shipments, we also shipped and deployed our 5G core, in the network. We initiated multiple PoC engagements in North America and Asia-Pacific regions, many of them with end-to-end and Tejas solutions, and many of them, in conjunction with partners, providing the, the complete end-to-end solution. We also had a few, another interesting thing that's also happened is, we engaged with discussions in multiple with several tier-one, mobile network operators for custom 5G radio deploy- development, you know, with in custom bands as a combination of custom bands, and also high-powered radios in, custom bands. So, this is one of the, interesting new engagements we have started happen that has happened based on our, the radio technology that we have. From a wireline perspective, we continue to increase our market share, in, in the BharatNet. And, we received an LOI from a new SI partner to supply, IP/MPLS routers for upgrading the BharatNet middle-mile network in, three states. We also won a significant order, for building an OTN network for a a strategic OTN network for a, it's a pan-India network for a, for Government of India customer, for Government of India enterprise, and we have received orders, subsequently for shipment. We also receive POs to supply our GPON FTTH products for high speed broadband, access networks from several, leading ISPs in India. They are our existing customers who have increased their deployment of, broadband connectivity to their customers. We also won a new, tier-one, Pan-African telecom operator, network in India, and we were selected for optical equipment, our 400 gig optical equipment for this, network. This is again a new customer footprint that we have won, in that continent. A few other corporate updates. We recently did a logo update which you can see on the on the right hand side of the slide, and we launched our new logo, with the Tata endorsement mark at the in the India Mobile Congress in in New Delhi, and, this new logo, it, gives a more refined and, new feel to the to the company and also reinforced our Tata Group associations while retaining its familiar, visual character. We won the TEPC Export Excellence Award in the large enterprise category. We continued to file our patents, as I mentioned, taking it to 748, out of which 266 are, connected to standards-related, you know, for 5G Advanced and 6G standards-related, patents. We also recently inaugurated our next generation connectivity lab, showcasing advanced research in 5G Advanced, 6G, and AI-powered network intelligence. We're also elected to the membership of TSDSI's Governing Council, which defines the standards, applicable for India. We had a very successful show at IMC recently, and, you know, some of the key announcements and demonstrations were for we demonstrated real-world application of 6G by, showing 6G sensing technology for drone and vehicle detection, and this was done in partnership with Qualcomm. We showed our end-to-end portfolio and capabilities, showcasing our unified mobility stack from radio baseband to core, now it's BasePlex family of products. We showed our hyperscale network solutions for cloud and AI data centers, and we also showed our future-ready optical access transport and routing portfolio, scaled for the AI era. During the conference, we participated in several, you know, thought leadership and other, discussions. We had participated in four speaking sessions on 6G foundations and roadmap at the Bharat 6G Symposium. We also participated in the CEO and CTO round tables with the Honorable Minister of Communications. And,
Anand Roy (Tejas Networks Ltd): several panelists in the IMC business and technology sessions. So, looking forward some of our, what are the key business drivers in wireless, continues to be the expansion of 5G deployment in emerging markets and you know, the 5G rollouts that are supposed to continue to 2030, and we and we continue to get new engagements for POCs and many of them leading to you know, commercial discussions stage with operators in these emerging markets. The the other important factor is driver is the global 5G F FWA subscriptions, the fixed wireless access are supposed to triple and reach close to 90 million by 2030. The expansion of existing 4G network domestically and that's the part of the BSNL 4G network expansion that's happening and AI driving the acceleration of 6G commercialization and which will drive the need for higher capacity, massive MIMO radios, and AI-native baseband and core. Similarly, in wireline, the drivers are the AI data centers, driving generational upgrades of the access aggregation and metro backbone network. High speed, the growth of and expansion of high-speed enterprise connectivity, increase in residential broadband connectivity, and and as the wireless networks you know, expand, expanding on the back and the buildout of the backhaul connectivity for the expanded mobile 5G networks. And there's a continued modernization of utility networks that's happening and which we continue to win, as we transition the networks from the older TDM networks to a modern packet-based transport networks. Now, I'll let Kumar talk about our key product focus areas going forward.
Kumar N. Sivarajan (Tejas Networks Ltd): Thank you, Arnab. We are we're expanding our 5G Radio Access Network portfolio. When we go international, there are many bands that come up, while India may have only five or six bands. These are all custom and we are expanding our radio portfolio to cover all these bands. And they go from 700 MHz to 4.9 GHz. We are also developing a compact baseband unit, which is as good as the best in the industry, which will support up to five frequency bands in one site. So, that's essentially for one site a very compact, you know, 1RU or 2-inch high unit will support all the frequency bands. We are making investments in 5G-Advanced and 6G. AI-RAN is an area of significant investment for us. All the algorithms within the radio, for estimating the channel, for managing the energy consumption, for predicting the mobility of users, all of these we are moving to AI-based. So that the performance is better. In IMC 2024 last week, we showed Integrated Sensing and Communication. So, essentially we are using, that we're showing that the 5G radios that we deploy can be used like a radar. So, they can sense and detect traffic, drones, cars, moving cars or even flags and so on. So, that's a demonstration that was well-received last week at IMC. Last year, we had shown Reconfigurable Intelligent Surfaces, which is a technology that improves fixed wireless access in 5G. In the wireline portfolio, we won the MAN tender, you know, deployed it in the last two years, which is based on IP-MPLS, and we are now expanding our IP-MPLS routing portfolio to cover higher bit rates, so that, you know, we can address much bigger networks. In the access, latency low latency is becoming important, especially because of AI-based applications. And we are developing high-capacity, low-latency access platforms at 200 gig and beyond. In terms of the backbone, there's both packet-based and optical-based backbone at terahertz terabits per second speeds, and we are investing in these products as well. Lastly, we already are rolling out AI-based network management solutions. We call it the Tejas Observability Platform or TOP. And this is this helps our customer, our telecom Telco customers, optimize their network, predict equipment faults, you know, and reroute or recover from network faults through resilience, and also to plan their capacities, because we can predict when they will run out of capacity or whether they're going to hit the peak and so on. So that's in terms of our products.
Kumar N. Sivarajan (Tejas Networks Ltd): grow and their capacity will start to run out. This is already being deployed by many of our customers today.
Anand Roy (Tejas Networks Ltd): Yeah. Thank you, Kumar. So, similarly the focus areas for the company as far as business and operations are concerned. In the business, we are seeing a lot of success with with other technology solution partnerships for getting a lot more international attractions. So, that is a key focus area for the company that we leverage our existing partnerships and continue to build new partnerships, you know, like technology and solution partnerships with which we can you know, address a lot more customers globally. The other focus area is to expand our market share in in private telcos both in, you know, mainly in out the wireline space where we are, but also in the next step, we want to work with them for our for our radio for our wireless technologies and get into a situation where we are you know, we do trials and POCs and all so that we can win business when they get to do their 5G 4G or 5G expansion, the next phase of the expansion of their networks. We also have a strategic focus on addressing data center interconnect applications. You know, as the those buildouts continue to happen and grow and as a especially as the AI data centers start the investments in the AI data centers starts happening in India. From a finance and operations perspective, you know, we recently won this big BSNL expansion order. And, first of all, we have to deliver on the BSNL 4G this order within the required timelines. That's an important focus area for us. And as a result of which, I mean as you know we have built the inventory for this expansion order, which were carrying for a while. And we have to achieve significant inventory reduction based on the execution of this order. We'll have increased focus on on collections. I mean a lot of customer deliveries and commitments have been executed and you know, so there will be a major focus on on the customer receivables. And achieving quarterly positive EBITDA performance. And so, the key takeaways for the quarter is that we have a strong growth in order book, based on which we have strong business visibility for the next few quarters. Our wireless business is maturing, we are you know, we are seeing increasing international engagements. The BSNL expansion order is an endorsement of our product scalability and performance, and you know, with the successful increase expansion of the network, we you know, the BSNL will see a lot more customers, you know, coming into this network and and growth of that business as well. We see a steady growth in wireline business. They are driven a lot you know, primarily by data center connectivity expansion and residential and enterprise broadband. We are well positioned for an AI-driven future with our investments in the next generation wireless technologies of 5G-Advanced and 6G, and with the portfolio of products that we're investing in for building end-to-end high bandwidth, low latency networks, which are required for the AI infrastructure. An important thing that's going to happen is the execution of the BSNL expansion order, which will bring down our inventory and gross debt significantly. And we are we will all we're also on the path of steadily improving our financial performance. And we have a visible path to profitability in the upcoming [inaudible]. So, with that, I come to the end of my presentation. I would like to open the floor to Q&A.
56 more turns of this transcript: log in to Stocksigma to read the full call.