Shares of Tejas Networks gave a big shock to investors on Friday. It fell 10% to ₹986 on BSE. The reason for this was the weak quarterly results of the company, which spoiled the mood of the market. The company’s net profit stood at ₹166 crore in the December 2024 quarter (Q3FY25). In the previous quarter (Q2FY25) it was ₹275 crore, meaning a huge 40% decline in profits. However, on an annual basis the picture looked somewhat better. The company had suffered a loss of ₹45 crore in the same quarter a year ago.
The company’s revenue in this quarter stood at ₹2,497 crore, which is 4.5 times more than ₹560 crore in the same quarter last year. But it was less as compared to ₹2,655 crore of the previous quarter.
Order book also weak
Tejas Networks’ order book stood at ₹2,681 crore at the end of Q3FY25, compared to ₹4,845 crore in the previous quarter. This is indicating increasing challenges for the company in the coming days.
By market close on Friday, Tejas Networks shares were trading 9.87% lower at ₹988. The stock has fallen 34% from its 52-week high of ₹1,495.10 (June 27, 2024). Whereas, 52-week low was seen at ₹652.05 (28 March 2024).
Battle of challenges and expectations
Tejas Networks has to fulfill BSNL’s huge 4G order in a short time. This may increase pressure on working capital and there is a danger of debt increasing. But the good news is that cash flow may improve once this order is completed. The company is facing tough competition from global giants like Nokia, Huawei and Ciena. To compete with them, Tejas will have to continuously invest in research and development.
Tejas Networks is part of the Tata Group and its products are used in more than 75 countries. Tata Group company Panatone Finvest is its majority shareholder. In the coming days, the company will not only have to grapple with these challenges but will also have to win the trust of investors. Now it remains to be seen how Tejas Networks improves its performance.
It is worth noting that star investor Vijay Kedia has invested in Tejas Networks. According to BSE data, at present his total investment in the company is 1.31 percent. However, Vijay Kedia has reduced his stake in the company by 0.56 per cent between October and December. Vijay Kedia’s stake was 1.87 percent in the September quarter.