Tejas Networks: Navigating Challenges, Eyeing Long-Term Growth in Q2 FY26

Tejas Networks Ltd., a prominent player in India's telecom equipment manufacturing sector, recently unveiled its Q2 FY26 earnings, presenting a complex picture of operational growth amidst financial headwinds. While the company demonstrated a robust 30% quarter-on-quarter revenue increase, significant provisions led to a net loss, raising questions about short-term profitability. However, management remains steadfast in its long-term vision, banking on strategic product launches, market expansions, and a strong order pipeline.

For Q2 FY26, Tejas Networks reported a net revenue of INR 262 crore, a notable jump from INR 202 crore in Q1 FY26. This growth was primarily fueled by key shipments to both Indian private customers and international clients. Despite this top-line performance, the company recorded a loss after tax of INR 307 crore, a deeper loss compared to INR 194 crore in the previous quarter. This was largely attributed to INR 190 crore in additional provisions, covering inventory obsolescence, write-downs from manufacturing process losses, design changes, and warranty expenses. The order book stood at INR 1,204 crore at the end of Q1, with India contributing 93% and international markets 7%. The revenue mix for the quarter saw India account for 79% and international markets 21%.

Strategic Initiatives and Market Momentum

Tejas Networks has been aggressively pursuing strategic initiatives across its wireless and wireline businesses. A significant highlight was the inauguration of BSNL's nationwide 4G service, with 97,500 cell towers now utilizing Tejas' 4G RAN products. This monumental achievement positions India as the fifth country globally to possess a complete 4G/5G technology stack, currently supporting 26 million active subscribers and handling four petabytes of daily data traffic. The company is awaiting a substantial BSNL 4G add-on purchase order of INR 1,526 crore for 18,000 sites, which is expected within the current financial year.

On the product innovation front, Tejas launched its 64T64R massive MIMO radio and a state-of-the-art 1.2Tbps DWDM transmission system product at the Indian Mobile Congress. These advanced offerings are crucial for addressing the escalating demand for 5G deployments and high-bandwidth connectivity, particularly for AI data centers. The company also reported successful completion of its first private 5G RAN deployment in a coal mine in MP and a 4G/5G RAN Proof of Concept (POC) in a mobile operator's network in South Asia, with ongoing engagements globally.

Financial Health and Outlook

The company's balance sheet reflects the impact of its strategic investments and operational challenges. Inventory at the end of Q2 FY26 stood at INR 2,383 crore, a slight decrease from INR 2,537 crore in Q1 FY26. Trade receivables were INR 4,026 crore, with INR 700 crore collected during the quarter. Payables reduced from INR 580 crore to INR 355 crore. Net working capital was INR 4,906 crore, and borrowings increased to INR 4,156 crore, primarily for working capital and capital expenditure related to ramping up the product portfolio.

Management expressed a positive and bullish long-term outlook, emphasizing strong drivers like rapid data consumption, AI applications, and ongoing 5G and 4G expansions in emerging markets. While specific quantitative guidance was not provided, the company anticipates significant collections from BSNL 4G-related receivables within the current financial year. Tejas Networks continues to invest heavily in R&D and sales expansion, actively participating in 6G standardization and aiming for a meaningful share in the global telecom market, estimated at $25-30 billion annually.

Leadership and Future Direction

The company also announced Dr. Randhir Thakur, CEO & MD of Tata Electronics, joining its Board as a Non-executive and Non-independent Director, bringing over 40 years of semiconductor industry experience. Tejas Networks was shortlisted as a finalist for the 2025 Network X Awards for its 'Most Innovative Optical Transport Use Case' and filed 39 new patents, bringing the total to 587. These developments underscore the company's commitment to innovation and strengthening its leadership team.

Tejas Networks is clearly in a phase of significant investment and transformation. While the short-term financial performance presents challenges, the company's strategic focus on advanced technologies, market expansion, and robust R&D positions it to capitalize on the immense opportunities in the evolving global telecom landscape. The management's confidence in converting its strong order book and ongoing engagements into future revenue remains a key theme for investors to watch.