Tejas Networks shares up 6% on purchase order of Rs 7,492 crore from TCS
Certainly, the news you provided highlights that Tejas Networks experienced a positive surge in their stock price on August 16. This rise was attributed to the company’s successful execution of a master contract with Tata Consultancy Services (TCS) pertaining to the supply, support, and annual maintenance services of Radio Access Network (RAN) equipment. This equipment will be used for Bharat Sanchar Nigam Limited’s (BSNL) nationwide 4G/5G network, spanning approximately 100,000 sites.
At 09:23 hrs, Tejas Networks’ stock was trading at Rs 843.55, reflecting a gain of Rs 28.50, equivalent to a 3.50 percent increase on the Bombay Stock Exchange (BSE).
Under the terms of the contract, Tejas Networks received a significant purchase order (PO) worth Rs 7,492 crore. This PO indicates the total value of the agreement, which Tejas Networks will earn through the supply, support, and annual maintenance services they will provide for the Radio Access Network equipment.
The contract with TCS represents a substantial business opportunity for Tejas Networks, as they will be contributing to the development and enhancement of BSNL’s 4G/5G network infrastructure across the country, helping to drive advancements in communication technology and connectivity. This successful collaboration and contract execution have likely bolstered investor confidence in Tejas Networks, leading to the positive movement in the company’s stock price on that particular trading day.
The contract between Tejas Networks Limited and Tata Consultancy Services (TCS) encompasses a comprehensive timeline and various aspects related to the supply, support, and maintenance services of Radio Access Network (RAN) equipment for BSNL’s Pan-India 4G/5G network.
1. Equipment Supply Timeline: The supply of the RAN equipment is scheduled to take place over the calendar years 2023 and 2024. This signifies that Tejas Networks will deliver the necessary infrastructure and technology components required for BSNL’s network expansion and enhancement during this two-year period. This phased supply approach ensures that the equipment is gradually integrated into the network infrastructure to minimize disruptions.
2. Support and Maintenance Services Duration: Following the completion of the supply phase, Tejas Networks is also responsible for providing support and maintenance services. The maintenance services are expected to cover a period of 9 years, starting from the conclusion of the warranty period. This extended maintenance period underscores Tejas Networks’ commitment to ensuring the longevity and optimal performance of the provided equipment.
3. Related Party Transaction Approval: Tejas Networks Limited, being a company that operates within a larger corporate group, has a connection with Tata Consultancy Services Limited through their common affiliation with Tata Sons Private Limited. Given this related party transaction, where a company interacts with another entity that shares common ownership or control, Tejas Networks sought and received necessary approval from its shareholders. This approval pertains to the fiscal year ending on March 31, 2024. The endorsement from shareholders indicates transparency and adherence to corporate governance practices, affirming that the transaction was carried out in a manner that considers the interests of all stakeholders.
4. TCS as a Subsidiary of Tata Sons: Tata Consultancy Services (TCS) operates as a subsidiary of Tata Sons Private Limited, which serves as the holding company for various Tata Group businesses, including Tejas Networks Limited. The affiliation within the larger Tata Group demonstrates the interconnected nature of businesses within the conglomerate and highlights the potential for collaboration and synergies among these entities.
This contract underscores the strategic partnership between Tejas Networks and Tata Consultancy Services, with a specific focus on contributing to the advancement of communication technology through the development and maintenance of BSNL’s nationwide 4G/5G network. The meticulous timeline for equipment supply and the extensive support and maintenance duration reflect the commitment of both parties to ensuring the successful implementation and long-term functionality of the network infrastructure.
During the April-June period, Tejas Networks Limited reported its financial performance, which revealed notable trends in terms of net loss and revenue figures. The financial results for this period highlight the company’s recent performance and provide insights into its growth trajectory.
Net Loss Trends:
1. QoQ Increase in Net Loss: Tejas Networks witnessed an increase in its consolidated net loss during the April-June period compared to the previous quarter. The net loss stood at Rs 26.3 crore, surpassing the loss of Rs 11.5 crore recorded in the preceding quarter. This higher net loss indicates that the company faced greater expenses or a decrease in revenue during the April-June period.
2. YoY Improvement in Net Loss: In a year-over-year comparison, Tejas Networks showed an improvement in its financial position. A year earlier, the company had reported a net loss of Rs 6.6 crore during the same period. The increase in net loss from a year ago suggests that the company experienced challenges or incurred additional costs during the current quarter.
Revenue Trends:
1. Sequential Revenue Decline: Tejas Networks’ revenue during the April-June period experienced a significant sequential decline of 37.2 percent. The revenue figure for this quarter was approximately Rs 188 crore, down from Rs 299.3 crore reported in the previous quarter. This decrease in revenue indicates a contraction in the company’s business activities or sales performance during the period.
2. YoY Revenue Growth: Despite the sequential decline, the company managed to achieve substantial year-on-year growth in terms of revenue. The topline (revenue) was up by over 46 percent compared to the same period in the previous year. This positive year-on-year growth suggests that, in the broader context, the company has managed to expand its revenue base over the past year.
In summary, Tejas Networks Limited’s financial results for the April-June period revealed a mixed performance. While the company posted a higher net loss compared to the previous quarter and a year ago, it also managed to achieve significant year-on-year revenue growth despite the sequential revenue decline. These financial figures reflect the challenges and opportunities the company faced during the specified period, shedding light on its financial health and growth prospects.
