Release Date: April 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tejas Networks Ltd (BOM:540595, Financial) reported its best-ever quarter and year in terms of revenue and profitability.
- The company achieved significant growth in both wireless and wireline segments, with a net revenue of INR1,327 crore for Q4 FY24.
- Tejas Networks Ltd (BOM:540595) ended the year with a strong order book of more than INR8,200 crore.
- The company successfully shipped equipment for over 10,000 sites for the BSNL 4G RAN project.
- Tejas Networks Ltd (BOM:540595) received multiple industry recognitions, including the Voice and Data Excellence Award in the Make in India category.
Negative Points
- The company's working capital increased significantly, driven mainly by inventory and receivables.
- There were concerns regarding delays in the BSNL project, although these were clarified as temporary issues.
- The international revenue contribution remains relatively low at 10% of total revenues.
- The company faces strong competition from global vendors in both domestic and international markets.
- Tejas Networks Ltd (BOM:540595) has a high dependency on the BSNL project, which could pose risks if there are further delays or issues.
Q & A Highlights
Q: This backlog order of INR8,200 crore doesn't cover the 5G order side, right? Is it just for the 4G coverage?
A: That's correct. It just covers our existing backlog using 4G and other wireline orders; it doesn't cover 5G coverage.
Q: My question is regarding the BSNL project. What exactly is the timeline for this project? Will it be executed in FY25 alone or will it extend to FY26 as well?
A: We expect to finish our supplies in this financial year, FY25. Most of the network will also get deployed and commissioned during that time.
Q: Are our products cost-competitive compared to international players in the Indian market?
A: Yes, our products are extremely competitive globally. We have technological differentiators, such as integrating optical transport into wireless, which no one else in the industry does. This integration helps reduce the total cost of ownership for wireless operators.
Q: Regarding the private telcos, is there an opportunity for us? Are we in discussions with some of the bigger private telcos for these radios?
A: Yes, we are engaged in multiple POCs with private telcos and critical infrastructure systems. We are undergoing trials and hope to secure opportunities both in India and internationally.
Q: How should we look at the working capital cycle as we ramp up our orders?
A: The working capital buildup is in preparation for executing the BSNL 4G project. As we progress over the next couple of quarters, the working capital will taper down as the execution progresses.
Q: Can you provide some clarity on the proof of concept you're doing on the utility side?
A: The POCs are for our wireless equipment, specifically 4G and 5G RAN equipment. These are multiple networks where they are being tried out for potential deployment.
Q: What is the split of revenue between India government and India private?
A: We categorize revenue into three sectors: Indian government (public sector companies like BSNL), Indian private (private telcos and ISPs), and international customers. Shipments to BSNL 4G are categorized as India private because our immediate customer is TCS, a private entity.
Q: How are we looking at our strategic partnerships with Valiant Communication? Are we considering any acquisitions for backward integration?
A: We have a strong partnership with Valiant Communication, especially for utility markets. Their teleprotection technology integrates with our transmission products, providing optimized solutions for utility and critical infrastructure customers.
Q: Do we have an estimate of what PLI incentive we may receive for FY25?
A: The PLI incentive is dependent on the revenues for the year. The policy states that the PLI would be between 5% to 6% of the manufacturing revenue, which is incremental over the base year.
Q: When will the PO for the 5G sites be out? Will it be this year or after the entire 4G execution is completed?
A: We will be doing a POC for the 5G upgrade in the next few months. Once that is completed, we expect to get the 5G upgrade business. The current order book does not contain the 40% upgradation for 5G.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
