Tejas Networks: How BSNL’s order delay impacted the company’s financials?

Synopsis: BSNL order delays stalled Tejas Networks revenue execution, leading to inventory above Rs. 2,300 crore while order book of Rs. 1,329 crore with quarterly losses of Rs. 197 crore, and a 66.07 percent stock decline in 1 year, highlighting short-term working-capital stress despite long-term growth potential.

Order execution delays in large government-led telecom projects often create temporary uncertainty around the financial performance of equipment manufacturers, particularly those with high exposure to a single anchor client. When project timelines slip, the impact is usually felt in the form of deferred revenues, uneven quarterly numbers, and tighter working-capital cycles.

Tejas Networks Limited, with a market capitalization of Rs. 6,462.69 crore, closed at Rs. 364.20 per equity share, down by 1.78 percent from its previous day’s close price of Rs. 370.80 per equity share.

Stock return

Tejas Networks Limited has delivered negative returns across multiple timeframes, with a 3-month return of -38.01 percent, a 6-month return of -44.56 percent, and a 1-year return of -66.07 percent. Over the longer term, the company has achieved a 5-year return of 176.54 percent, reflecting consistent growth and robust performance in its sector.

Tejas Networks Limited, founded in 2000 and headquartered in Bengaluru, is a telecom and networking company that makes equipment and software used to build communication networks. It provides products for 4G and 5G mobile networks, fiber broadband, optical transmission, routing and switching, satellite communication, and network management systems. Along with selling equipment, the company also offers services such as network setup, maintenance, and managed services to telecom operators, internet providers, utilities, defence organisations, and government bodies in India and abroad.

Financial Outlook

In Q2FY26, revenue stood at Rs. 307 crore, showing a QoQ growth of 17 percent from Rs. 262 crore in Q1FY26, indicating a sequential recovery. However, on a YoY basis, revenue declined sharply by 88 percent compared to Rs. 2,642 crore in Q2FY25, reflecting an exceptionally high base last year and a steep contraction in topline activity.

EBITDA in Q2FY26 was Rs. 303 crore, compared with Rs. 473 crore in Q1FY26, marking a QoQ improvement of 36 percent, though it deteriorated sharply from a positive Rs. 211 crore in Q2FY25, indicating a YoY swing into losses. Similarly, net loss improved QoQ by 36 percent to Rs. 197 crore from Rs. 307 crore in Q1FY26, but on a YoY basis, it reversed from a profit of Rs. 166 crore in Q2FY25 to a loss, underscoring continued stress on margins despite sequential improvement.

Over the past three years, the company has demonstrated strong growth, achieving a revenue CAGR of 153 percent, a profit CAGR of 109 percent and a price CAGR of -13 percent, reflecting both its operational performance and market confidence.

A return on equity (ROE) of about 12.8 percent and a return on capital employed (ROCE) of about 15.5 percent and debt to equity ratio at 1.29, demonstrate the company’s financial position.

BSNL Order Delay

FY25 initially marked a breakthrough phase for Tejas Networks, as the company successfully deployed around 100,000 BSNL 4G sites, positioning itself as a key domestic telecom equipment supplier. Building on this momentum, Tejas prepared for the next leg of growth, a Rs. 1,526 crore BSNL add-on order for 18,685 additional sites. While an advance purchase order (APO) was received in May 2025, the final purchase order has been delayed for nearly 8 months, abruptly halting revenue visibility and execution.

Inventory Doubled

The single biggest financial impact of the delay has been on working capital. In anticipation of execution, Tejas procured large quantities of equipment, pushing inventory levels above Rs. 2,300 crore for four consecutive quarters. This compares unfavourably with the company’s order book of Rs. 1,329 crore, meaning inventory is roughly 1.7× the confirmed orders. As a result, cash is locked in stock rather than being converted into sales, leading to an elongated working capital cycle. This working capital stress is the primary driver of losses, as revenues could not flow despite readiness to execute.

Capital Allocation Impact

Over the nine months ended December FY26, Tejas reported a cumulative loss of Rs. 698 crore, versus a profit of Rs. 518 crore in the year-ago period. While part of the cash outflow relates to capex investments made over recent years to build 4G/5G capabilities, this has only partly offset the damage. The dominant factor remains lower working capital efficiency, as inventory has not translated into billing and collections.

High Customer Concentration 

The financial stress has been magnified by Tejas’ heavy dependence on BSNL, which dominates its domestic business. Of the Rs. 1,329 crore order book, 92 percent is from India, with only 8 percent from international markets. The lack of meaningful revenue from private Indian telecom operators has left the company with limited fallback options while waiting for BSNL execution to resume.

Market Reaction and Balance Sheet Concerns

Investor confidence has weakened sharply. During 2025, Tejas Networks’ share price fell 68 percent, from Rs. 1,185 to around Rs. 380, reflecting concerns over cash burn, inventory overhang, and delayed profitability. Analysts have also questioned whether a fundraise may become necessary if losses of Rs. 150–200 crore per quarter persist without BSNL revenues restarting.

Management View

Management maintains that once the Rs. 1,526 crore BSNL add-on order is released and execution begins, the Rs. 2,300+ crore inventory will unwind rapidly, easing working capital pressure and restoring revenues. Additional growth is expected from Vodafone Idea contracts, international 4G/5G engagements, and long-term demand driven by AI-led data traffic growth. However, until BSNL execution resumes at scale, Tejas Networks remains in a transition phase where lower working capital efficiency, only partly offset by past capex, continues to weigh heavily on financial performance.

Conclusion

Tejas Networks current financial stress is mainly due to delays in BSNL order execution, which has locked cash in inventory and postponed revenues. This has led to short-term losses and weak stock performance, even though the company is operationally ready. Once BSNL orders resume, revenues and cash flow are expected to improve, making the issue largely temporary rather than structural.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Tejas Networks: How BSNL’s order delay impacted the company’s financials? appeared first on Trade Brains.