Why Tejas Networks Share Price is Falling

Share price of Tejas Networks has fallen 4% in the last five days after the company reported lower than expected results for the September 2022 quarter.

The Tata group-backed company is among the leaders in telecommunication services. It designs, develops, and sells high performance telecom and networking products. These are used to build high speed communication networks.

Let's take a look at the company's results.

Lower-than-expected quarterly results

Tejas Networks reported a 27.3% YoY increase in revenue for the September 2022 quarter. Due to the increase in revenue, the company's operating profit rose over 17% YoY.

However, as expenses increased, the company reported an over 70% YoY decline in net profit. Margins also fell.

Yet on a sequential basis, the company's performance has improved. It posted a profit of Rs 11 m after posting losses for three consecutive quarters.

It also witnessed strong order booking driven by multiple wins for its optical products. The outlook for 5G is strong and the company expects continual improvement in the second half of the year.

It has applied for new Design-led PLI incentive scheme for telecom products, with a potential for higher incentives.

Beneficiary of the 5G Megatrend

Ever since the 5G spectrum auctions concluded, share price of Tejas Networks has been on an uptrend.

In its annual report for 2021-22, the company has highlighted that post the 5G spectrum auctions, the company is planning a multi-year capex cycle to build both wireline and wireless infrastructure.

With a strong backing from the Tata group and the huge opportunities in 5G space, the stage is set for Tejas Networks.

Earlier this month, the company successfully demonstrated a 4G/5G network and applications on an end-to-end indigenous network, using its own hardware and software.

The end-to-end network showed a full range of innovative wireless and wireline products from Tejas Networks and its subsidiary Saankhya Labs.

The company had acquired 64.4% of Saankhya Labs in July 2022. For the balance 35.6%, it has filed for amalgamation of Saankhya Labs and Saankhya Strategic with Tejas, through NCLT process on 30 September 2022.

Saankhya R&D team's focus is to strengthen the company's development programs for 5G, RAN, cellular broadcast, satellite communications, and fabless semiconductor chip design.

Between Tejas and Saankhya Labs, the company has have 434 patents.

How Tejas Networks shares have performed lately

Tejas Networks shares have declined by 4% in the last five days.

However, the stock has emerged as a multibagger in a span of two years by rising approximately 20 times.

Investors' wealth in these two years has gone up due to the stock's robust performance. In the current year alone, the stock has zoomed by nearly 60%.

The stock of Tejas Networks touched its 52-week high of Rs 773 on 10 October 2022 and a 52-week low quote of Rs 360 on 8 March 2022.

At the current price, the stock trades at a price to book value multiple of 3.86.

About Tejas Networks

Tejas Networks is among the earliest telecom product companies that has built homegrown technology products in networking and optical backhaul crucial for high speed broadband.

It was incorporated in the year 2000. The company designs and manufactures optical transmission products, which find application in cellular backhaul, high-speed broadband, and backbone network of telecom service providers for transportation of data and voice over optical fiber.

The company's products are also used in defense communication networks and by utility companies.

Tejas Networks successfully completed its IPO in June 2017 and is a listed company.

To know more, check out Tejas Networks company fact sheet and quarterly results.

For a sector overview, read our telecom sector report.

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