Detailed Narrative
Q3 FY26 Financial Performance Overview
Tejas Networks reported a revenue of INR 307 crores for Q3 FY26, marking a 17% sequential growth from INR 262 crores in the previous quarter. The revenue was primarily driven by sales of wireline products to Indian private operators and international customers. Despite the growth, the company recorded a negative Profit After Tax of INR 197 crores and a negative EBIT of INR 239 crores, although EBIT showed an improvement from negative INR 394 crores in Q2 FY26. Expenses for the quarter included provisions for past service costs related to gratuity and compensated absences, and INR 24 crores for warranty expenses.
Order Book and BSNL 4G Project Delays
The company's order book stood at INR 1,329 crores at the end of Q3 FY26, an increase from INR 1,204 crores in the prior quarter, with 92% originating from Indian customers. A significant portion of the inventory, valued at INR 2,363 crores, has been procured for the BSNL 4G add-on order for 18,000 sites. However, this order has been delayed due to BSNL's operational readiness, impacting inventory utilization. Management expects the order to be received at an appropriate time⏳ and its execution to commence in the next financial year, which should lead to rapid inventory depletion.
Strategic Wins and International Expansion
Tejas Networks achieved several key wins, including being selected as a 5G RAN supplier for a pilot on the Delhi-Mumbai railway corridor and securing multiple private 5G deployments in India for applications in ports and mines. The company also won additional BharatNet packages, becoming a major supplier of IP/MPLS routers. International wins included a WDM backbone network for a broadband ISP in Africa and an MPLS-TP project for a power sector company in Southeast Asia. Notably, Tejas secured its first win in a sovereign data center networking application in India for its switching products.
Product Development and Innovation
The company continues its focus on innovation, filing 26 new patents in Q3, bringing the cumulative global patents filed to 613, with 370 already granted. The majority of these new patents are related to 5G advanced and 6G technologies, aligning with upcoming standards. Tejas also received INR 85 crores in PLI incentives for Q4 FY25, contributing to a cumulative INR 397 crores for FY25, reflecting its commitment to domestic manufacturing and R&D.
Capital Structure and Profitability Outlook
Net debt decreased to INR 3,349 crores in Q3 FY26 from INR 3,738 crores in Q2 FY26, while gross debt was INR 3,885 crores. Management acknowledged the current losses and high working capital, stating that efforts are underway to improve working capital management. The path to profitability is expected to materialize as the business scales up, particularly with increased international business, which typically offers better margins and working capital cycles. No fundraise is currently being discussed at the board level.
Leadership and Long-Term Vision
The board is actively working on appointing a new CEO following the resignation of Mr. Anand Athreya, with an appointment expected 'at some point of time soon.' Management expressed a positive long-term outlook, driven by rapid technology transitions, increasing demand for data (especially from AI applications), and leveraging new products for international markets. The BSNL project is viewed as an excellent platform that helped mature products and scale operations, rather than being the sole lifeline for the company.