Ladies and gentlemen, good day and welcome to Tejas Networks Q2 FY 2027 earnings conference call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aryan Tripathi, Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Good evening, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today, Arnob Roy, Managing Director and Chief Executive Officer. AVS Prasad, Chief Financial Officer. Dr. Kumar N. Sivarajan, Chief Technology Officer. Preetham Uthaiah, Chief Operating Officer, and Sanjay Malik, Chief Strategy and Business Officer. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Thank you. Good evening and welcome to the Tejas Networks earnings call of Q2. I'd like to start with a summary of the quarter. We ended with a revenue of INR 406 crores as opposed to INR 257 crore on a year-on-year basis. The PAT was a loss of INR 207 crores, which was an improvement from - INR 307 crores of Q2 of FY 2026. The order book at the end of the quarter was INR 2,315 crores. From a revenue, which is compared to Q1. Q1's order book was INR 1,500 crores. From a revenue mix, India was 88%, compared to the international revenues of 12%. From order book mix, 96% of India and 4% of international.
The key reason was because of our order book being a receipt of the LOI and subsequent POs for 18,000 + 4G sites for the BSNL 4G network expansion. That's the reason why the India component of the order book went up substantially. The Q2 revenues are driven by shipments of optical IP and FTTx products to our private operators and system integrators, and we also started the initial shipments of the BSNL expansion order. We also did initial shipments of our end-to-end 5G solution to our international customer in South America. This is a business that we had won last quarter, and we started our shipments in this quarter. We filed 26 patents in Q2, taking our global patent filing count to 748. I'll now hand it over to our CFO, to take us through the numbers.
Good evening, everyone. The quarter two FY 2027 revenue from operations is around INR 406 crores, compared to quarter two of INR 262 crores in FY 2026, an increase of around 55%. The improved scale reflects the continued recovery in terms of business performance. At H1 levels, compared to INR 459 crores in H1 FY 2026, we are at INR 808 crores. This growth represents approximately around 24% year-on-year growth. At the EBITDA level, compared to INR 293 - in quarter two of FY 2026, we are at INR 108 crores in the current quarter. At the PAT level, compared to INR 307 crores in quarter two FY 2026, we are at INR 207 crores. In terms of revenue comparison against quarter one FY 2027, against INR 402 crores of revenue, we are at INR 40 crores.
At the EBITDA level, compared to the last quarter EBITDA of INR 99, we are at around INR 108 crores. In terms of the balance sheet items, the net working capital, compared to quarter one, is lower at INR 4,235 crores. This reduction in terms of working capital significantly is on account of lower trade receivables, on account of increased collections. Also as a business, we do a non-recourse bill discounting, which also has customer advance settlements which happens on a regular basis. The reduction is on account of increased collections and non-recourse discounting. In terms of inventory levels, compared to INR 2,358 crores, we are at around INR 2,314.
The high levels of inventory, we expect the significant portion of the inventories would be utilized in executing the BSNL 4G order in the coming quarters, for which the deliveries have already started in quarter two. At the net debt position, compared to the INR 4,277 in quarter one, the debt has increased to INR 4,384 crores. This increase is on account of continued investments in terms of CapEx at Tejas as per the plan. Also in terms of the increased operational and funding of the increased operational cost.
Thanks, Prasad. Now for some more commentary on the quarter, a few business updates are as follows. For the wireless business, the most significant thing, as we mentioned, was receiving the LOI for 18,685 sites for which we have started shipments. The shipment of the end-to-end 5G mobile network. We did the initial RAN shipments. We also shipped and deployed our 5G core in the network. We initiated multiple PoC engagements in North America and Asia Pacific regions, many of them with end-to-end Tejas solutions and many of them are in conjunction with partners, providing the complete end-to-end solution. One of the interesting thing that has also happened is we engaged with discussions with several Tier-1 mobile network operators for custom 5G radio development, in custom bands as a combination of custom bands and also high-power radios in custom bands.
This is one of the interesting new engagements that has happened based on the radio technology that we have. From a wireline perspective, we continue to increase our market share in the BharatNet, and we received an LOI from a new SI partner to supply IP MPLS routers for upgrading the BharatNet middle mile network in three states. We also won a significant order for building an OTN network for a strategic OTN network. It is a pan-Indian network for Government of India customer, for Government of India Enterprise. We have received the orders subsequently for shipment. We also received POs to supply our GPON FTTx products for high-speed broadband access networks from several leading ISPs in India. They are our existing customers who have increased their deployment of broadband connectivity to their customers.
We also won a new Tier-1 pan-African telecom operator network in India, and we were selected for optical equipment, our 400 G optical equipment for this network. This is again a new customer footprint that we have won in that continent. Two other corporate updates. We recently did a logo update, which you can see on the right-hand side of the slide. We launched our new logo with the Tata endorsement mark at the India Mobile Congress in New Delhi. This new logo, it gives a more refined and a new feel to the company and also reinforced our Tata Group associations while retaining its familiar visual character. We won the TEPC Export Excellence Award in the large enterprise category.
We continue to file our patents, as I mentioned, taking it to 748, out of which 266 are connected to standards related for 5G Advanced and 6G standards related patents. We also recently inaugurated our next-generation connectivity lab, showcasing advanced research in 5G Advanced, 6G, and AI-powered network intelligence. We were also elected to the membership of TSDSI's governing council, which defines the standards applicable for India. We had a very successful show at IMC recently. Some of the key announcements and demonstrations were for, we demonstrated a real-world application of 6G by showing 6G sensing technology for drone and vehicle detection, and this was done in partnership with Qualcomm. We showed our end-to-end portfolio and capabilities, showcasing our unified mobility stack from radio base band to core, the WavePlexus family of products. We showed our hyper-scale network solutions for cloud and AI data centers.
We also showed our future-ready optical access, transport, and routing portfolio, scaled for the AI era. During the conference, we participated in several thought leadership and other discussions. We had participated in four speaking sessions on 6G foundations and roadmap at the RF 6G symposium. We also participated in the CEO and CTO roundtables with the Honorable Ministry of Communications. Tejas have several panelists in the IMC business and technology sessions. Looking forward, one of the key business drivers in wireless continues to be the expansion of 5G deployment in emerging markets and the 5G rollouts, which are supposed to continue till 2030. We continue to get new engagements for PoCs and many of them leading to commercial discussion stage with operators in these emerging markets.
The other important factor driver is the global 5G FWA subscriptions, the fixed-wireless access, are supposed to triple and reach close to 90 million by 2030. The expansion of existing 4G network domestically, that is part of the BSNL 4G network expansion that is happening. AI driving the acceleration of 6G commercialization, which will drive the need for higher capacity massive MIMO radios and AI-native baseband and core. Similarly, in wireline, the drivers are the AI data centers driving generational upgrades of the access aggregation and metro backbone networks. High speed, the growth of and expansion of high-speed enterprise connectivity, increase in residential broadband connectivity, as the wireless networks expand, expanding on the back and the build-out of the backhaul connectivity for those expanded mobile 5G networks.
There is a continued modernization of utility networks that is happening, which we continue to win as we transition the networks from the older TDM networks to a modern packet-based transport networks. I will let Kumar talk about our key product focus areas going forward.
Thank you, Arnob. We are expanding our 5G radio access network portfolio. When we go international, there are many bands that come up. While India may have only five or six bands, these are all custom, and we are expanding our radio portfolio to cover all these bands. They go from 700 MHz to 4.9 GHz. We are also developing a compact baseband unit, which is as good as the best in the industry, which will support up to five frequency bands in one site. That is essentially, for one site, a very compact, one RU or 2-in high unit will support all the frequency bands. We are making investments in 5G Advanced and 6G. AI RAN is an area of significant investment for us.
All the algorithms within the radio for estimating the channel, for managing the energy consumption, for predicting the mobility of users, all of these we are moving to AI-based so that the performance is better. In IMC 2026 last week, we showed integrated sensing and communication. Essentially, we are using the we are showing that the 5G radios that we deploy can be used like a radar.
So they can sense and detect traffic, drones, cars, moving cars, or even flags and so on. That is a demonstration that was well-received last week at IMC. Last year, we had shown reconfigurable intelligent surfaces, which is a technology that improves fixed wireless access in 5G. The wireline portfolio, we won the MAN tender and deployed it in the last two years, which is based on IP MPLS.
We are now expanding our IP MPLS core routing portfolio to cover higher bit rates so that we can address much bigger networks. In the access, low latency is becoming important, especially because of AI-based applications, and we are developing high-capacity, low-latency access platforms at 200 G and beyond.
In terms of the backbone, there is both packet-based and optical-based backbone at terabits per second speeds, and we are investing in these products as well. Lastly, we already are rolling out AI-based network management solutions. We call it the Tejas Observability Platform on TOP. This helps our customer, our telecom telco customers optimize their network, predict equipment faults, and reroute or recover from network faults through resilience. Also to plan their capacity because we can predict when the traffic will grow and their capacity will start to run out.
This is already being deployed by many of our customers today.
Yeah. Thank you, Kumar. Similarly, the focus areas for the company as far as business and operations are concerned, in the business that we are seeing a lot of success with the technology solution partnerships for getting a lot more international traction. That is a key focus area for the company that we leverage our existing partnerships and continue to build new partnerships, like technology and solution partnerships with which we can address a lot more customers globally. The other focus area is to expand our market share in private telcos, both mainly in the wireline space where we are.
But also in the next step, we want to work with them for our radio, for our wireless technologies, and get into a situation where we have, maybe do trials and PoCs and all, so that we can win business when they get to do their 4G or 5G expansion or the next phase of the expansion of their networks. We also have a strategic focus on addressing Data Center Interconnect applications as those build-outs continue to happen and grow, and especially as the AI data centers start, the investments in the AI data centers starts happening in India. From a finance and operations perspective, we recently won this big BSNL expansion order, and first of all, they will deliver on the BSNL 4G, this order within the required timelines. That is an important focus area for us.
And as a result for which, I mean, as you know, we have built the inventory for this expansion order, which we are carrying for a while. We have to achieve significant inventory reduction based on the execution of this order. We will have increased focus on collections. I mean, a lot of the customer deliveries and commitments have been executed.
Also, there will be a major focus on the customer receivables and achieving quarterly positive EBITDA performance. So the key takeaway for the quarter is that we have a strong growth in order book, based on which we have a strong business visibility for the next few quarters. Our wireless business is maturing. We are seeing increasing international engagements. The BSNL expansion order is an endorsement of our product scalability and performance.
With the successful increase expansion of the network, BSNL will see a lot more customers coming into this network and the growth of their business as well. We see a steady growth in wireline business. They are driven a lot primarily by data center connectivity expansion and residential and enterprise broadband.
We are well-positioned for an AI-driven future with our investments in the next-generation wireless technologies of 5G Advanced and 6G, and with the portfolio of products that we are investing in for building end-to-end high bandwidth, low latency networks which are required for the AI infrastructures. An important thing that is going to happen is the execution of the BSNL expansion order, which will bring down our inventory and gross debt significantly. We are also on the path of steadily improving our financial performance, and we have a visible path to profitability in the upcoming years.
With that, I come to the end of my presentation. I would like to open the floor to Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Vishal Khurana with Peace Wealth. Please go ahead.
Yeah. Hi. Thank you for the opportunity, sir. It is very heartening to see our receivables have come down significantly. If you just can comment on how much dues we have recovered from BSNL in particular, and how much are still due that we have to receive from BSNL. By when do we expect that payment to come in? Because in the last call, I think you had mentioned that we should be getting the payments by the quarter end. That is my first question.
Yeah. Thanks, Vishal. I think from BSNL now, we have come to the timelines for the milestone deliveries. We have met the milestone delivery requirements. This is the quarter when we will see a significant amount of collections coming from BSNL, which are connected to the milestones that we have achieved. I cannot specify the exact number, but it is going to substantially reduce our receivables.
That is great to know, sir. Sir, the order book that we have mentioned this time, INR 2,300 crore, does it also include this BSNL order for INR 1,500 crore we got from TCS?
A part of it. Because we have received the LOI for the entire amount. But right now, as and when we get the POs, the purchase orders are all connected to the sites and the bands and the circle readiness and the identification. As we keep on getting the POs, they come into our order book, and that is what we ship. All of INR 1,500 crore is not there in the order book yet, but most of it we expect to come by the end of this quarter.
Okay. I just want to figure out, sir, because last quarter our order book was INR 1,500 crore. So out of this INR 2,300 crore, can we just know what amount has come from outside BSNL?
I don't think I can share the exact details of the order book wins from customers here and there, but all I can say is that all of BSNL's INR 1,500 crore that we announced is not in this order book. I mean, it's a substantial portion of it, and the rest of it has come from non-BSNL customers.
Okay. Sir, there's one question that really baffles me is that we are going international, we are going in all the expos that are happening globally and participating in all the bids. Are we asked this question that we are an Indian company and we are trying ourselves globally, and yet we have not been able to tap anything outside BSNL within India? How do you answer to such questions if you've been asked, and how do you think about it?
Yeah. I think, if you look at it, by the time we were delivering BSNL, a lot of the Indian operators had already built their 4G and 5G networks, right? To get into those networks, we need to wait for the next phase of expansion. Until that time, we have to get our products and solutions qualified. In the next expansion phase, that's going to happen.
But if you look at it, the rest of our- when you're talking about BSNL only, you're probably referring to only the wireless products, because wireless products are deployed widely in the India private operators. When the question comes to I don't think there is ever an issue of why aren't we deployed beyond the BSNL's mobile network. As I said, most of the operators have finished their significant phase of the development.
We are also targeting when they get to the next phase of expansion, we target to be part of that. More importantly, the traction is coming from markets where there is new 5G deployment happening. They need new vendors for doing it because a couple of things that many of these countries do not get the attention or the pricing or the products that they need for their markets.
As a new vendor, we are more suited and more responsive to their needs, right? Because we are not like large Tier-1 pan-country operators. Our initial business is with smaller, in emerging market operators, Tier 1, Tier 2 in smaller markets. The other thing is that many places we are deploying in partnership with solutions with other company. I mentioned about partnership with NEC, Rakuten.
There are other partners that we have signed up and are signing up. Many of them, we like a joint solution where they have access to the customer. We are providing our radio technology, they are providing some of their CU-DU technology and so on. Or we are providing the core, and they are providing part of the network. This kind of joint solutions is also what is giving us a lot of traction, and this issue does not really come up. The fact that we have deployed a network of this scale, which is working successfully and well commercialized with BSNL, turning profits and increasing customers, I think is a very strong testimony to really go and approach our international customers with.
That is great, sir. Just a follow-up on this. We are doing some PoC trials with Vi also. That is what I have been reading in the papers. Since Vi is also going to expand further in 5G and more on 4G as well, do we see a case in future where we might also be a partner to Vi and where we can provide our wireless RAN to them?
Yeah, as I mentioned with many of the operators, without taking specific names, I would say that yes, the fact that we are doing PoCs and trials is basically to get to that stage, where we qualify for their next phase of expansion and we become one of the qualified vendors when they actually start procuring equipment for the next phase of expansion. Yes, the trials are actually for that purpose, and the trials will be across multiple bands, all the different bands that they need, and they are qualifying our equipment thoroughly, before they get to the next level of vendor selection.
One last question from my side, sir, then I can join back the queue. I attended the IMC recently, and one of the guy explained to me the DCI stack that we are trying to make. One part of it is also the GPU vendor onboarding that we need to do in order to complete our stack. Just if you can comment on that. Are we in discussion with those GPU vendors also, and where are we in this stage of DCI where we can have the DCI ready, and then we can go outside and bid for it? Also, if I understand correctly, we are also trying to do some kind of PoC with the data center for DCI on a smaller scale for now. If you can just elaborate on both of these questions. That's my last question.
No, our approach to this market is not partnership with the GPU vendors. We are partnering with people who are building the entire data center rack, which consists of the compute, whether it's the server-based, the GPU-based, the compute, and then providing the networking solutions, right? The interconnectivity of data centers, some of the data center switching elements. We are working with the system integrators who are building the entire solution kind of a thing, and not with the direct end customer. The focus largely is more on the connectivity between the data centers, on the data center interconnect. That's where we are. As I said, the approach is not working directly with the GPU vendors or building a complete stack with them.
Understood, sir. Thank you so much for answering all my questions. Thank you.
Thank you, Vishal.
Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Our next question comes from the line of Keyurkumar Vadaliya with Niveshaay. Please go ahead.
Hello. Am I audible?
You are audible, sir. You may proceed.
On the product line side, I have two, three questions. Firstly, that you have mentioned regarding the AI and 6G and all. I think in annual reports and the last conference and all, we also have, I think, getting the trial on the coverage side on the railways. If you can provide the insights on that, first thing. Second is on the product of the AI DCI. In the last six to eight months, are we able to get any orders on those products? What kind of opportunity in terms, if you can provide either in range or a quantum, we are seeing on the AI DCI products.
This is Kumar. Let me answer the railway. We are deployed in railways, a 5G network, 700 MHz on a trial section. Okay?
This is a 700 MHz communication network. It is not only for Kavach, it potentially be used for Kavach, but it is all for the internal communication needs of railways. Okay? So that we got the PO some time ago, and we have deployed a trial section. Based on the results of the trial, we expect to expand. Regarding the AI, I will ask Arnob.
Yeah. I think, for the Data Center Interconnect, yes, we have been part of this Data Center Interconnect network with our existing products as well as the newer optimized data center product that we have. Connectivity, not only in India, it has been across many other countries as well internationally. It is not only the connection between the data centers, but also the connectivity from the enterprises to the data centers as well. This market has been a very important and a focus market for us, and we are indeed winning several business in this area.
Okay. Coming to the financials. In recent quarter, we have mentioned that, INR 145 crores regarding the contract manufacturing process losses was included in the costs. If you can provide, what was this, and is it a part of the recurring nature or is it only a one-time basis? If that is the case, will that lead to the gross margin improvement in the next few quarters?
Kumar, I think the provisioning was of the previous year, not the current quarter.
Hmm. I think that was mentioned in that in added quarter—
It is September.
Okay.
It is September 2025.
Okay.
There is no provisioning of that sort in the current quarter.
Okay. So there was no recurring in nature in future—
Yeah—
—quarter also. Okay.
Correct. This was connected to the major amount of manufacturing that we did for the first 100,000 site order for BSNL.
Understood. Another thing, sir. The BSNL PO that we are receiving right now—
Sir, sorry to interrupt, but your line is a little muffled. If you could please check the device mode.
Is it audible right now properly?
Yes. Much better, sir. Please go ahead.
Yeah. Thank you. I am asking, the BSNL PO that we are receiving right now, how much it will, in terms of percentage or if you can provide any quantum, it will reduce our inventory portions and the debt portion that we have right now, the gross debt. What kind of reductions as a management we are planning in next six to nine months, sir?
Yeah. As I said, I cannot give exact numbers, but as you know, a significant part of the inventory that we have been carrying for many quarters is for this BSNL expansion order. Over the next few quarters, we should see a significant reduction of this inventory. That's all I can say. Right? It will come down to the earlier levels, which are in line with the kind of quarterly business that we do.
If you can also answer on the gross debt side.
Yeah. It's going to be a similar story in the sense that with the shipment of these new sites, even the collection. The inventory is going to get converted into collectibles. With that, and with the collection of the past from the initial order, as I said, we've completed some of the important milestones, and those are due, which whatever comes in, significant amount is going to come in. Again, from a debt point of view, we're going to see a significant reduction. Right? Both of these I kind of mentioned in my presentation in the financial outlook going forward, both inventory and debt is going to come down significantly with the execution of the order.
Okay. Thank you so much, sir.
Thank you. Participants, you may press star and one to ask a question. Our next question comes from the line of Vishal Khurana with Peace Wealth. Please go ahead.
Yeah, just one more question from my side on the D2M side. So recently, I was reading that there is an RFP that is going to be issued by the Government of India for the deployment of D2M. If you can just comment on that, sir, how do you see this opportunity for Tejas Networks?
We have in Tejas, we have developed the broadcast radio heads. We have also done this trial for a few sites around Delhi and shown that this technology works. We are expecting system integrators who will participate in this RFP once it is issued, and they will be the ones who will actually build out the network. We are well-positioned, if this network were to happen, when this happens, to be the broadcast radio providers to the winners. That is how we are positioning ourselves, that we will not be the system integrator.
Okay. And one more question from my side. You mentioned that we are doing PoCs internationally. If you can just quantify how big are these telcos, if these are telcos. If you can just quantify how big networks they are having in terms of thousands, something like that.
Okay. The PoCs we are doing in at least a few different telcos around the world, both in the Americas and as well as Asia Pacific. These are typically the second or third operator in those countries, or sometimes they're building a 5G-only network. That's the case with one of the operators. In another case, somebody's building, there are two incumbents, but he's building a data-only 5G network. It's of that nature. Somebody who's doing a fresh build-out. There's also incumbents who are getting into 5G, where we're doing trials. It's mostly 5G, sometimes also 4G in developing markets. These are telcos often providing voice and data services, sometimes data only. It's a mixed bag in terms of these PoCs. We are also engaged, and Arnob mentioned this earlier, with the Tier 1 telcos or Tier 1 markets, where they have custom radio requirements.
These radio requirements are for custom combinations of bands, or there is some peculiarity in the spectrum allotment in that country, where we need a special spectral emission mask or spectral characteristic of the radio. The Tier 1 engagement is mainly on custom radio development. These are Tier 1s and Tier 1s.
Okay. And, sir, on the NEC side, whatever I've read is NEC about $500 million business that they were doing in the 5G radio side. Now they are pivoting into virtual radios. Are we the exclusive partner for NEC, and how is NEC helping us in order to get leads and where we are able to pitch to the customer with the help of NEC? If you can just help me understand how this collaboration with NEC is playing out for us and how it could play out in the future for us.
I cannot comment on the NEC's revenue number on radio. I do not know the accuracy of that. As we have announced, we have licensed the massive MIMO 5G radio technology from NEC, and we have started to supply that technology to some of their customers. We have also started to supply that technology to new customers. There has been some changes we have made. We developed on the technology we got, and with that, we are starting to supply both to previous customers of NEC and new customers of ours. That is about all I can say. I cannot comment on the revenue numbers.
Yes. We are part of the agreement that we are radio development partners for many of their future radios, and we are engaged in developing many of their new generation radios for their customers in the international markets. That is the scale of the radio partnership that we have with them.
Okay. Thank you so much, sir.
Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Participants who wish to ask questions may press star and one at this time.
Yes. If there are no more questions, I think we can close the call a bit early, I guess.
Sir, we do not have anyone in the queue at this time. If you would like to go ahead with any—
Okay—
—closing comments.
Yeah, sure. Thank you very much. Thanks a lot for taking the time to attend the call. I know it's the festive season. It's Navratri, and all of us want to get back to our celebrations. But want to leave with a parting thought that there's a lot of progress that has happened in the company in Q2, and especially with the winning of the BSNL opportunity. Looking forward, this is going to give a significant momentum to the company, not only in terms of the revenues in the next few quarters, but also the reduction of inventory, reduction of our debt, reduction of receivables, and all those kind of things. Going forward, we should be seeing a much improved financial performance going forward from the company. Thank you very much, and look forward to talking to you again at the end of next quarter.
Thank you.
Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.