Why Tejas Networks Share Price is Rising

Shares of Tejas Networks are in focus of late, rising as much as 13% in the past seven trading sessions. At present, they are trading a tad lower than their yearly high levels.

Ever since the 5G spectrum auctions concluded, share price of Tejas Networks is on an uptrend. Surprisingly, the company is a loss making one, having posted losses for three consecutive quarters.

In the most recent June 2022 quarter, Tejas Networks reported a consolidated net loss of Rs 66.4 m.

Even on a full year basis, the company's net loss stands at Rs 627 m for financial year 2021-22.

So, why isn't the market factoring company's losses in the share price?

Let's find out why Tejas Networks share price is rising...

Strong Revenue Projections

A month ago, Tejas Networks reported its Q1 results where it posted a net loss owing to subdued revenues.

The company also saw margin pressure due to industry-wide increase in component prices over last few quarters.

However, the company's management has highlighted the coming quarters will be strong for Tejas networks as it has a robust order book. As of date, the company's order book stands at Rs 11.6 bn.

On top of the strong order book, the company continues to receive more orders.

Recent Orders and Acquisitions

Earlier this month, the Tata group company secured a contract worth Rs 3 bn from Power Grid Corporation of India.

Under this contract, Tejas Networks will supply, install, commission and provide support of its optical networking equipment, for the augmentation of Power Grid's pan-India telecom backbone and access networks.

This huge order should help Tejas Network establish itself as a dominant player in the industry.

Coming to its recent acquisition...

Tejas Networks recently bought the residual stake to acquire 64.4% holding in Saankhya Labs.

Saankhya is a premier wireless communication and semiconductor solutions company based out of Bengaluru.

When Tejas announced the acquisition back in March 2022, it had said the acquisition would strengthen its wireless offerings by adding 5G ORAN, 5G cellular broadcast, and satellite communication products to its product portfolio.

Moreover, it will add to the company's customer base in India and international markets. Now that the acquisition is complete, investors seem to be factoring in good growth ahead.

The 5G Factor

This has to be the prime factor behind Tejas Networks' stellar rally in recent days.

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

As India readies for 5G adoption, global players will look for opportunities in this space. For instance, Finnish tech players recently said they are looking at opportunities to collaborate in 5G and 6G network planning and roll-out.

Here's a statement from Ambassador of Finland to India...

• India is about to experience another communication revolution with the arrival of 5G.
  
  Given that Finland is one of the leading developers in 5G and 6G, we believe our companies can provide system integrators with access to cutting-edge technology for global implementation.

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

Tejas Networks is among the top 5G stocks in India and has a presence in global markets as well.

How the Stock has Performed in Past 1 Year

Share price of Tejas Networks saw sharp up moves and even downtrend phases in the year gone by.

Take a look at the chart below to see the volatility in share price of Tejas Networks.

Tejas Networks has a 52-week high quote of Rs 578 on 11 April 2022 and a 52-week low of Rs 351 on 26 August last year. Over the year gone by, shares of Tejas Networks have gained 44% while on a YTD basis, they are up 25%.

Due to the developments in the 5G space after recently concluded 5G auctions, telecom companies and even telecom equipment companies like Tejas have seen a decent rise in their share price.

Performance of Telecom & Related Companies Since 5G Auctions

Company Name	Change (%)
Bharti Airtel	6%
Indus Towers	-13%
Tata Communications	11%
Vodafone Idea	1%
Tata Teleservices	-11%
Affle (India)	17%
ITI	-2%
HFCL	10%
Reliance Communications	21%

Source: Equitymaster

To know more, check out Tejas Networks latest news and analysis.

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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