This Tata Sons-backed data network provider can help Bsnl’s 4g services

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Despite a net loss of Rs 7 crore in the April to June quarter, Tejas Networks is confident of substantial growth in the last three quarters of the financial year.

wealth desk

To buy to sell Tejas networks to share

Shares of Tejas Networks, the optical, broadband and data networking company, in which Tata Sons has a majority stake, hit a 52-week high on Friday.

Reports in the Economic Times suggest that TCS and BSNL are close to finalizing a deal worth $2 billion, which could help the public telecommunications provider launch its 4G services. The report also indicates that Tejas Networks should locally manufacture the network equipment for BSNL.

CNBC TV-18 has not verified the information and cannot guarantee its authenticity.

Tata Sons acquired a 43.3% stake in Tejas Networks for Rs 1,884 crore in July last year to establish a networking equipment business ahead of the launch of 5G networks. Additionally, it will also buy an additional 26% stake through an open offer and shares worth Rs 34 crore from four senior executives of Tejas Networks.

Last night Tejas Networks announced the merger of Saankhya Labs and its subsidiary Saankhya Strategic Electronics Pvt. Ltd with itself. The company had acquired a 64.4% stake in Saankhya in July 2022. Tejas will issue 112 shares of the company for every 100 shares of Saankhya Labs held by its respective shareholders.

“This merger is expected to improve operational, organizational and financial efficiencies, help achieve economies of scale by pooling resources, generate synergies in revenues, costs and operations, and will help build a stronger foundation for the future growth of the company’s business,” the company said in an exchange filing.

Tejas Networks also won an optical network contract worth Rs 298 crore from Power Grid in August.

For the April to June period of the current financial year, Tejas Networks reported a net loss of Rs 7 crore as supply chain constraints prevented the company from shipping adequate systems. Since most of its transactions were fixed price, rising component costs also hurt the company’s gross margins.

The company won a few big government tenders in the April-June period, which the company says should turn into purchase orders in the quarter ending today. As of June 30, the company’s order book in India stood at Rs 986 crore and the international order book at Rs 172 crore.

Tejas Networks also has cash worth Rs 1,739 crore on its books which it plans to use for its organic and inorganic growth.

Shares of Tejas Networks are up nearly 60% this year, after tripling in 2021 and gaining 45% in 2020.

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