Tejas Networks tanks 7% on widening net loss in Q3

Shares of Tejas Networks tanked 7 percent in trade on January 20 after the broadband, optical fibre, and wireless networking company posted a consolidated net loss in the quarter ended December 31, 2023.

Tejas Networks clocked in a net loss of Rs 44.9 crore during the quarter, deepening from a loss of Rs 15.20 crore in the year-ago period, impacted by higher input costs. However, revenue from operations grew 104 percent on-year to Rs 560 crore for the quarter.

As of 2pm, shares of Tejas Networks were trading at Rs 815, lower by 5.4 percent, on the NSE, compared to the previous session’s closing price.

The revenue growth was mostly in-line, led by BSNL’s 4G project execution. But margins disappointed, as Tejas shipped primarily low-margin products in Q3. This is likely to improve from Q4, though.

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Domestic brokerage Emkay Global said that Tejas Networks benefits from the Centre’s emphasis on domestic manufacturing and the PLI scheme, large spends on BSNL, BharatNet, and the Indian Railways as well as references from TCom and TCS for fetching more clients. The global move to replace Chinese telecom also acts as a tailwind.

The brokerage has cut its EBITDA margin estimates by 100-300 bps, as Tejas missed the Q3 margin estimates on mix change, though it is expected to marginally reverse in the coming quarters. While retaining its ‘buy’ call, Emkay lowered its target price on the company to Rs 1,025 from Rs 1,050 earlier. The updated target price implied a 19 percent upside from the CMP.

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