# Tejas Networks Investment Analysis: Evaluating the Future of India's Telecom Infrastructure Leader

> This comprehensive investment thesis explores Tejas Networks (540595) through a detailed evaluation of its business model, management efficacy, and long-term growth trajectory within the telecom equipment sector. The analysis provides deep insights into the company's competitive positioning and potential risk factors, offering investors a clear view of how Tejas Networks is poised to capitalize on emerging global connectivity trends and infrastructure expansion.

**Companies**: Tejas Networks
**Sectors**: Telecom
**Published**: 2026-04-07
**Last Updated**: 2026-04-07
**Source**: https://thesisloop.ai/thesis/f8fc8741-6f25-4ba3-95d7-dfca02fcec1d

## Score Overview

| Company | Management | Business Model | Future Growth | Risk |
|---------|-----------|---------------|--------------|------|
| Tejas Networks | 75/100 | — | 61/100 | 70/100 |

## Tejas Networks (BSE:540595)

**Sector**: Telecom | **Industry**: Telecom -  Equipment & Accessories

### Management Credibility

- **[CATALYST] India 6G R&D Initiative** (POSITIVE, MET): The company filed 26 new patents in Q3, bringing the cumulative total to 613 global patents, with a focus on 5G Advanced and 6G standards. (1 met across 1 tracked commitment)
  > And our goal is to have a 6G product as early as possible in line with the rest of the market and not lag there.
- **[CATALYST] Export Market Expansion to Developing Economies** (NEUTRAL): Management expects multiple ongoing wireless product trials in India and international markets to close in the coming months. (+4 more commitments)
  > Many of them started in Q2 and many of them have progressed to the commercial negotiation stage and are expected to close in the coming months.
- **[CATALYST] Operator Network Modernization Cycles** (NEUTRAL): Tejas Networks expects to expand its business with Vodafone Idea (VIL) in FY26 as their networks expand.
  > And that business is expanding and we hope to expand that business going forward in FY26 as well, as their networks expand.
- **[CATALYST] PLI Disbursement Milestones** (POSITIVE, MET): The company received a significant portion of PLI incentives during the quarter for the Q3FY25 period. (1 in progress, 2 met across 3 tracked commitments)
  > considering there is reasonable assurance that the Company will comply with the conditions attached to the PLI scheme and that the remaining grant amount of Rs. 278.78 crore will be received.
- **[METRIC] Export Revenue as Percentage of Total** (NEUTRAL): Tejas is developing 5G radio variations for every continent they are engaged in, including specific bands for Africa and Latin America. (+2 more commitments)
  > Expanded global sales footprint and strategic initial wins will give us a strong momentum for increasing our international business
- **[METRIC] Gross Margin Trajectory** (NEGATIVE, MISSED): While the company reported a loss (PAT -501 Cr) for H1FY26 due to inventory provisions and order delays, the historical gross margin for FY25 was 22%, which is within the guided 20-30% range. (1 met, 1 exceeded, 3 missed across 5 tracked commitments)
  > So depending on the - well, not giving the exact number, but depending on the margins that you assume, which is basically between 20% to 30% range, that could give you the implied revenue required to be recovering the fixed cost that we have.
- **[METRIC] Order Book-to-Revenue Ratio** (NEUTRAL, IN_PROGRESS): Inventory levels actually increased to INR 2,537 Cr due to delayed shipments and PO receipts, though management maintains the intent to convert and ship in upcoming months. (3 in progress across 3 tracked commitments)
  > I think most of the opportunities that I talked about, we do expect them to close and a large part of them getting executed in FY '26.
- **[METRIC] R&D Spend-to-Revenue Ratio** (NEUTRAL, MET): Headcount has continued to grow, reaching 2,424 in H1FY26 from 2,370 in FY25, with R&D intensity increasing to 69% of the workforce. (1 met across 1 tracked commitment)
  > In general, our employee cost is in line with our investments that we've been talking about, particularly on the R&D and international sales side. And we expect it to continue to increase going forward.
- **[PRINCIPLE] Open RAN Technology Shift** (NEUTRAL): Strategic partnership with Rakuten Symphony to develop integrated 5G Open RAN solutions for global expansion. (+1 more commitment)
  > Strategic partnership with Rakuten Symphony to develop integrated 5G Open RAN solutions and drive global expansion
- **[TREND] BSNL 4G/5G Network Buildout** (NEGATIVE, REVISED): Receivables saw a substantial reduction of approximately 18.4% in a single quarter. (1 met, 4 revised across 5 tracked commitments)
  > So, in summary, in Q2, one of the reasons for the smaller revenue and bookings was the delay in the receipt of BSNL 4G add-on PO of Rs. 1,500 crores for 18k sites... we are expecting them in this financial year.
- **[TREND] Fiber Optic Cable Demand Surge** (POSITIVE, EXCEEDED): The company successfully won the Bharatnet Phase-III order through a System Integrator partner during the quarter. (4 met, 1 exceeded across 5 tracked commitments)
  > BharatNet Phase-III; Capacity augmentation of DWDM networks (400G+) in utility segment
- **[TREND] PLI Scheme Driving Local Manufacturing** (POSITIVE, EXCEEDED): The company successfully claimed and received a significant incentive of INR 312 Cr for FY25, demonstrating strong execution of the PLI roadmap. (1 exceeded across 1 tracked commitment)
  > Till FY27... Current scheme is for five years, so it will end in FY27.
- Inventory levels have slightly increased to INR 2,537 crores (from ~INR 2,367 Cr) as the company prepares for the execution of expected large orders like the BSNL expansion. (4 in progress, 1 met across 5 tracked commitments) (POSITIVE, MET)
  > Inventory of INR 2,537 Cr during Q1FY26 (vs 2,367 Cr in Q4FY25) – Will be converted to finished goods and shipped in upcoming months

### Business Model

- **[CATALYST] India 6G R&D Initiative** (POSITIVE, Change: EXPANDING): The company continues to expand its technical moat, filing 26 new patents this quarter, with a strategic shift toward 5G-Advanced and 6G standards. (1 expanding)
  > Specifically, even within that field, these are what are called standards-related patents... It's mostly 5G advanced and 6G-related patents that are being filed.
- **[CATALYST] Operator Network Modernization Cycles** (POSITIVE, Change: EXPANDING): Wireline remains the primary revenue driver, growing 17% sequentially, though the company faces a 'lumpy' transition as it waits for major wireless orders to materialize. (1 expanding)
  > Our results for the quarter Q3 FY '26 were revenue of INR307 crores compared to INR262 crores of revenue in previous quarter. This is a growth of about 17%.
- **[CATALYST] PLI Disbursement Milestones** (POSITIVE, Change: EXPANDING): The company successfully monetized its PLI status, receiving substantial cash incentives for FY24 and FY25, validating the regulatory moat. (5 expanding)
  > We also received around INR123 crores of PLI incentives for FY24 and the first tranche of INR189 crores for FY25.
- **[METRIC] Export Revenue as Percentage of Total** (POSITIVE, Change: EXPANDING): International revenue share increased to 19% this quarter, led by shipments to customers in Africa and Europe. (4 expanding, 1 contracting)
  > Revenue broadly comprises from Indian customers about 85% and international about 15%.
- **[METRIC] Gross Margin Trajectory** (NEGATIVE, Change: CONTRACTING): Wireline business continues to grow within the India Private segment among mobile operators, while the overall product portfolio expanded to include 800Gbps and 1.2Tbps DWDM systems. (1 expanding, 2 contracting)
  > we saw a good amount of growth of our wireline business in the India Private segment among the private mobile operators... We enhanced our optical portfolio from 400Gbps to 800Gbps and 1.2Tbps per channel DWDM systems.
- **[METRIC] Order Book-to-Revenue Ratio** (NEGATIVE, Change: CONTRACTING): Revenue from wireline and existing business saw a significant sequential decline due to delays in purchase orders and shipment clearances, though it remains the core of the current INR 1,241 crore order book. (1 contracting)
  > We had a net revenue of INR202 crores, which was lower than our Q4 revenues of INR1,907 crores... Revenue is lower mainly due to delay in purchase orders, delay in certain inventory arrivals and shipment clearances for a few customers.
- **[METRIC] R&D Spend-to-Revenue Ratio** (POSITIVE, Change: EXPANDING): The company continues to expand its defensible moat through patent filings, reaching 548 total patents, and launching high-capacity 1.2 terabit DWDM solutions. (4 expanding)
  > Filed 26 patents in Q3FY26; Tejas has cumulatively filed 613 global patents of which 370 have been granted
- **[PRINCIPLE] 5G Capex Cycle Dependency** (NEUTRAL): Wireless products are currently in a transition phase with multiple trials (POCs) ongoing; while not yet the primary revenue driver this quarter, they represent the future growth engine for 4G and 5G rollouts. — Wireless Products (0% revenue share)
  > We have multiple trials ongoing for our wireless products, both in India and international markets... many of them have progressed to the commercial negotiation stage.
- **[PRINCIPLE] Import Substitution Potential** (POSITIVE, Change: EXPANDING): India continues to be the dominant geographic segment, increasing its share of the closing order book to 92%, driven by government infrastructure projects and private telco expansions. (1 expanding)
  > Closing Order Book Mix India: 92%
- **[PRINCIPLE] Order Book Concentration Risk** (NEUTRAL, Change: SHIFTED): India remains the overwhelming revenue driver, with the 'India Private' segment (which includes the BSNL project via TCS) holding the dominant share of the record INR 8,923 crore annual revenue. (2 expanding, 2 shifted, 1 stable)
  > India Private grew significantly and had the dominant share... our BSNL 4G shipments through TCS is considered as part of the India Private business.
- **[TREND] BSNL 4G/5G Network Buildout** (POSITIVE, Change: EXPANDING): Wireless products have transitioned from a transition phase to a massive revenue driver, having shipped over 100,000 sites for the BSNL 4G/5G project, representing a record-breaking single-vendor RAN delivery. (5 expanding)
  > we shipped 100,000 sites on the BSNL 4G project... This is one of the largest single-vendor RAN network in the world ever delivered in record time.
- **[TREND] Fiber Optic Cable Demand Surge** (POSITIVE, Change: EXPANDING): The segment remains a core driver with new wins in Bharatnet Phase-III and critical infrastructure (railways, oil & gas), though overall revenue saw a sharp quarterly dip due to shipment delays. (1 stable, 2 expanding across 1 engine)
  > Quarter revenue driven largely by sale of Wireline products to India Pvt and International customers
- **[TREND] PLI Scheme Driving Local Manufacturing** (POSITIVE, Change: EXPANDING): The regulatory moat has strengthened significantly with substantial PLI incentive realizations, jumping from initial eligibility to ₹312 Cr for FY25. (1 expanding)
  > Received Rs 84.95 crore as PLI incentives for Q4-FY25; has cumulatively received Rs 397 crore as PLI incentives for FY25
- Tejas Networks designs and manufactures high-tech equipment used to build telecommunications networks, selling hardware and software for 4G, 5G, and fiber services to phone companies and internet providers globally. (+1 more finding) (NEUTRAL)
  > Quarter revenue driven largely by sale of Wireline products to India Pvt and International customers; Multiple trials ongoing for our Wireless products in India and International markets

### Future Growth

- **[CATALYST] India 6G R&D Initiative** (NEUTRAL): Tejas is investing heavily in future technologies, filing 26 new patents this quarter, primarily focused on 5G-Advanced and 6G standards.
  > the majority of patents are related to 5G advanced and 6G technologies. ... It's mostly 5G advanced and 6G-related patents that are being filed.
- **[CATALYST] Export Market Expansion to Developing Economies** (POSITIVE, Trend: NEW_TREND): International growth is steady but remains a small portion of the total mix; however, the new NEC partnership is a new strategic catalyst for global expansion. (2 new trend across 2 signals, 2 leading indicators)
  > Won a DWDM backbone network buildout order from a broadband ISP in Africa; Won a network transformation application for our MPLS-TP products for a power sector company in SE Asia
- **[CATALYST] Operator Network Modernization Cycles** (POSITIVE, Trend: ACCELERATING): Revenue is showing a steady upward trajectory on a quarter-on-quarter basis, driven by shipments to private and international customers. (1 steady, 2 accelerating across 3 signals)
  > Revenue from Operations 307 ... QoQ growth of 17%
- **[CATALYST] PLI Disbursement Milestones** (POSITIVE, Trend: STEADY): PLI incentive inflows are accelerating as the company hits production milestones, providing significant cash flow support. (3 accelerating, 2 steady across 5 signals)
  > We received INR85 crores as PLI incentives for Q4FY25 and cumulatively INR397 crores of PLI for FY25.
- **[METRIC] Domestic Value Addition Percentage** (POSITIVE, Trend: STEADY): Inventory levels remain high and steady, representing a massive 'coiled spring' of potential revenue once converted and shipped. (1 steady across 1 signal)
  > Inventory of INR 2,363 Cr during Q3FY26 (vs 2,383 Cr in Q2FY26) – Will be converted to finished goods and shipped in upcoming months
- **[METRIC] Export Revenue as Percentage of Total** (POSITIVE, Trend: ACCELERATING): International traction is accelerating with a new strategic partnership with Rakuten Symphony and network expansion wins in Africa and Europe. (3 accelerating across 3 signals)
  > Increasing our Wireless International customer engagements through partnerships with NEC and Rakuten
- **[METRIC] Gross Margin Trajectory** (NEUTRAL): The company expects higher profit margins from international business compared to the highly competitive Indian market.
  > in the international markets, wherever we are engaging and wherever we are in commercial discussions, the prices are at a much different level and the margins are also at a different level.
- **[METRIC] Order Book-to-Revenue Ratio** (NEGATIVE, Trend: REVERSING): The order book has significantly expanded to INR 2,767 Cr (INR 1,241 Cr current + INR 1,526 Cr expected BSNL order), representing a massive acceleration compared to the previous quarter's INR 1,019 Cr. (1 accelerating, 4 reversing across 5 signals)
  > Order book at end of Q3: INR 1,329 Cr (1,204 Cr in Q2FY26)
- **[PRINCIPLE] 5G Capex Cycle Dependency** (NEUTRAL): The company is expanding its 5G wireless business through a pilot project for the Delhi-Mumbai railway corridor and multiple private 5G wins in ports and mines.
  > Selected as the 5G RAN supplier on a section of the Delhi-Mumbai railway corridor for a Kavach pilot; Multiple wins for Private 5G deployments in India for applications in ports and mines
- **[PRINCIPLE] Order Book Concentration Risk** (NEGATIVE, Trend: DECELERATING): Revenue has seen a sharp reversal, dropping from INR 1,907 Cr in Q4FY25 to just INR 202 Cr in Q1FY26 due to delayed BSNL purchase orders and inventory clearances. (2 reversing, 1 decelerating across 3 signals)
  > Q1FY 26 Net Revenue: INR 202 Cr (1,907 cr in Q4FY25)
- **[TREND] BSNL 4G/5G Network Buildout** (NEGATIVE, Trend: DECELERATING): Revenue growth is accelerating massively on an annual basis (3.6x) driven by the BSNL 4G rollout, reaching record highs for the company. (3 accelerating, 2 decelerating across 5 signals)
  > And finally for the big BSNL 4G add-on PO for the 18,000 sites that we have been working on for quite some time, we have a delay in the receipt of this PO.
- **[TREND] Defense and Satcom Diversification** (POSITIVE, Trend: NEW_TREND): Tejas is diversifying its revenue streams by entering the specialized railway safety market, a new trend for their 5G RAN equipment. (1 new trend across 1 signal)
  > We have been selected as a 5G RAN supplier on a section of the Delhi-Mumbai railway corridor for a pilot on the Kavach project
- **[TREND] Fiber Optic Cable Demand Surge** (POSITIVE, Trend: NEW_TREND): Tejas has secured a dominant position in BharatNet Phase-3, winning the largest number of packages among suppliers for IP/MPLS routers. (4 new trend across 4 signals)
  > I believe the company's notification said that it will be deploying over 50,000 plus routers. ... this particular order is for BharatNet Phase 3 and for all the routing products. I would say implementation period is over next two years.
- **[TREND] PLI Scheme Driving Local Manufacturing** (NEUTRAL, Trend: STEADY): Inventory levels remain high but have started to come off slightly as the company prepares to convert these stocks into finished goods for upcoming shipments. (1 steady across 1 signal)
  > Inventory for the quarter at the end of the quarter stood at Rs. 2,383 crores. It has come off slightly compared to the previous quarter.
- Inventory levels remain high but are steady as the company prepares to convert these stocks into shipments for upcoming quarters following the peak BSNL shipping phase. (5 steady across 5 signals, 3 leading indicators) (POSITIVE, Trend: STEADY)
  > Inventory of INR 2,363 Cr during Q3FY26 (vs 2,383 Cr in Q2FY26) – Will be converted to finished goods and shipped in upcoming months

### Risk Assessment

- **[METRIC] Export Revenue as Percentage of Total** (NEGATIVE): The risk remains high and intensifying in terms of revenue mix. For FY25, the India Private segment (which includes BSNL shipments via TCS) was the dominant share, while International business remained small at only 3% of overall business. (1 intensifying)
  > International business had a year-over-year increase of 18%. In the overall scheme of things, it's still a small number. It was like 3% of our overall business.
- **[METRIC] Gross Margin Trajectory** (NEGATIVE, Risk: MODERATE): The risk is intensifying as the net loss widened to Rs. 307 crores in Q2 FY26 from Rs. 194 crores in Q1 FY26, driven by massive one-time provisions. (4 intensifying, 1 easing)
  > because of the size and the ARPU challenges, it's a very, very competitive market. So, the price levels in India are quite different and quite challenging as compared to international markets.
- **[METRIC] Order Book-to-Revenue Ratio** (NEUTRAL): Inventory remains extremely high at Rs. 2,383 crores, which is nearly double the current order book of Rs. 1,200 crores, though it came off slightly from the previous quarter. (2 stable)
  > Inventory for the quarter at the end of the quarter stood at Rs. 2,383 crores... we have taken advanced inventory action in anticipation of some large orders and hence the inventory number is high.
- **[METRIC] R&D Spend-to-Revenue Ratio** (NEUTRAL, Risk: MODERATE): The risk is stable. Employee costs are predominantly fixed and have increased due to R&D investments. ESOP costs for the year were approximately INR 80 crores, and management expects these costs to remain at similar levels. (1 stable)
  > I see depreciation and amortization as a fairly sizable expense, INR104 crores in current quarter. Is it correct to assume that most of this is actually amortization on the R&D capitalization? Sumit Dhingra: Yes
- **[PRINCIPLE] 5G Capex Cycle Dependency** (NEUTRAL, Risk: MODERATE): While revenue grew 17% compared to the previous quarter, it is significantly lower than the levels seen in the same period last year, suggesting a potential slowdown in large-scale deployments. [DEMAND]
  > Revenue from Operations: 2,642 (Q3 FY25) vs 307 (Q3 FY26)
- **[PRINCIPLE] Order Book Concentration Risk** (NEGATIVE, Risk: HIGH): The risk is intensifying as the order book concentration in India increased from 85% revenue mix to 92% of the closing order book. (1 intensifying, 4 stable, 2 high-severity)
  > Closing Order Book Mix • India: 92%
- **[TREND] BSNL 4G/5G Network Buildout** (NEGATIVE, Risk: HIGH): The risk remains high and is intensifying in the short term as the delay in receiving the Purchase Order (PO) and shipping for the 18k BSNL sites directly caused the massive revenue slump this quarter. (4 intensifying, 1 easing, 2 high-severity)
  > Delay in receipt of BSNL 4G add-on PO of 1,526 Cr for shipment of 18k sites
- The risk is intensifying as net debt has increased to approximately INR 2,442 crores (Borrowings of INR 3,269 Cr vs Cash of INR 827 Cr), driven by high working capital needs for the BSNL project. (5 intensifying, 4 high-severity) (NEGATIVE, Risk: HIGH)
  > Net Debt of 3,349 Cr vs 3,738 Cr in Q2FY26 mainly due to lower working capital, partly offset by capex; Gross Debt of 3,885 Cr and cash of 537 Cr

### Scenario Analysis

- The surge in AI-driven data traffic acts as a primary catalyst, forcing a first-order spike in R&D spending to develop 800G and 1.2T optical solutions. This investment enables a second-order pivot into the high-margin sovereign data center and Data Center Interconnect (DCI) markets, moving the company beyond traditional telecom. Ultimately, this creates a third-order structural shift where Tejas becomes a critical node in the global AI infrastructure supply chain, diversifying its revenue toward international private markets and reducing sovereign risk. (POSITIVE)
  > AI applications driving massive traffic growth
- The Iran conflict triggers first-order shipping disruptions in the Red Sea, directly threatening Tejas's imported component pipeline for the critical BSNL 4G/5G rollout. This leads to second-order cost pressures through spiked marine insurance and logistics expenses, exacerbating the company's current negative EBIT. However, these pressures catalyze a third-order structural shift where Tejas emerges as a preferred 'trusted' vendor for sovereign infrastructure and defense projects like AFNet and Kavach, effectively trading short-term profitability for long-term market dominance in regionalized trade blocs. (POSITIVE)
  > A bit on the balance sheet side, our inventory for the quarter broadly was at a similar level as compared to the previous quarter at INR2,363 crores.

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