Tejas Networks has seen a sharp correction from its all-time high as the company moved from a period of exceptionally strong BSNL-led revenue growth to a much weaker earnings phase. The stock’s decline has coincided with a steep fall in revenue, continued losses, higher debt and delays in large project execution.
At the same time, the company has begun rebuilding its order pipeline, with the latest Rs. 1,537 crore Letter of Intent from Tata Consultancy Services for BSNL’s 4G network providing a significant potential revenue opportunity. The key question now is whether these orders can translate into actual execution, revenue and cash generation.
With a market capitalisation of Rs. 9,294 cr, the shares of Tejas Networks Ltd closed at Rs. 521.90 per share, up from its previous close of Rs. 516.40 per share. The stock made an all-time high of Rs. 1,495, trading at a discount of 65% to current levels.
Stock falls sharply from its peak
The correction has come after the stock had rallied significantly on expectations of strong telecom infrastructure spending and the company’s involvement in BSNL’s 4G rollout.
The correction needs to be viewed alongside the company’s financial performance. The sharp increase in revenue and profitability during FY25 was largely supported by the execution of the BSNL 4G project. Once a substantial portion of that project was completed, the company faced a much lower revenue base in FY26, while several expected orders were delayed.
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This is important because the FY25 numbers were unusually high rather than representative of a steady long-term revenue trajectory. Tejas itself said revenue increased nearly nine-fold between FY23 and FY25, mainly due to large projects including BSNL 4G and BSNL MAAN.
FY26 revenue collapsed after BSNL execution
Tejas Networks reported consolidated revenue from operations of just Rs. 1,103 crore in FY26, compared with Rs. 8,923 crore in FY25. This represents a decline of nearly 88%.
The company also moved from a Rs. 447 crore net profit in FY25 to a Rs. 909 crore net loss in FY26. EBIT, which stood at Rs. 905 crore in FY25, turned into a loss of Rs. 1,085 crore in FY26.
The company attributed the sharp revenue decline partly to the completion of supplies for around 100,000 BSNL 4G sites in FY25, which had significantly boosted the previous year’s revenue. It also highlighted delays in the award of certain projects that were expected to be executed during FY26.
Therefore, the deterioration was not simply because demand for telecom equipment disappeared. A major factor was the transition from a very large project-execution phase to a period in which the company was waiting for new orders to replace that revenue.
Profitability came under pressure
The problem for Tejas was not limited to lower revenue. Its cost structure also came under significant pressure. According to the FY26 annual report, the company’s gross profit turned negative at Rs. 38 crore, compared with a gross profit of Rs. 1,969 crore in FY25. As a percentage of revenue, gross margin moved from 22.1% in FY25 to -3.4% in FY26.
The company recorded provisions of Rs. 170.39 crore for inventory obsolescence/write-downs in FY26, mainly related to contract manufacturing process losses, design changes and other matters. It also recorded Rs. 108.09 crore of warranty provisions during the year.
These costs came at a time when revenue had already fallen sharply, magnifying their impact on profitability. The company had also flagged inventory and warranty-related provisions during FY26. In Q2 FY26, for example, Tejas reported a Rs. 307 crore net loss and said provisions related to manufacturing process losses, warranty and inventory obsolescence were around Rs. 190 crore.
Q1 FY27 shows revenue recovery, but losses remain
The first quarter of FY27 provided some improvement on the revenue front. Tejas reported Rs. 402 crore of revenue, almost double the Rs. 202 crore recorded in Q1 FY26. The company said the quarter was supported by international shipments of 5G radios and domestic shipments of 100G/400G optical and FTTx products.
However, the improvement has not yet translated into profitability. Tejas reported a Rs. 202 crore net loss in Q1 FY27, compared with a Rs. 194 crore loss in Q1 FY26.
This means that while the revenue trajectory has improved from the depressed levels seen during FY26, the company has not yet demonstrated a return to sustainable profitability. For the stock’s longer-term recovery, investors would therefore need to track whether higher revenue begins to improve operating margins and eventually reduce losses.
Debt has become an important factor
At the end of Q1 FY27, Tejas Networks had gross debt of Rs. 4,866 crore, cash of Rs. 589 crore and net debt of Rs. 4,277 crore. This was higher than the Rs. 3,531 crore net debt reported at the end of FY26.
The increase in debt matters because telecom equipment projects can require significant working capital before revenue and cash collections are realised.
Tejas had already seen a substantial increase in working-capital requirements during FY25 and FY26. The company’s FY26 earnings presentation showed inventory of Rs. 2,438 crore and trade receivables of Rs. 3,258 crore at the end of Q4 FY26, with net working capital at Rs. 4,138 crore.
Consequently, even if new orders increase revenue, investors will need to watch whether execution converts those sales into operating cash flow and whether debt begins to come down.
BSNL order provides a fresh opportunity
The biggest near-term development is the Rs. 1,537 crore Letter of Intent from TCS, announced on August 27, 2026. The LoI covers the supply of RAN equipment, accessories and installation materials for 18,685 BSNL 4G sites. Importantly, Tejas said the detailed purchase order would be issued by TCS in due course.
The size of the opportunity is significant when compared with the company’s existing order book. Tejas ended Q1 FY27 with an order book of Rs. 1,529 crore, meaning the Rs. 1,537 crore LoI is slightly larger than the entire reported order book at the end of June.
The development also follows Tejas’ earlier involvement in BSNL’s 4G rollout. In 2023, the company received a Rs. 7,492 crore purchase order from TCS for supplying 4G/5G RAN equipment for approximately 100,000 sites. Tejas subsequently completed deliveries for the major initial deployment.
Can BSNL orders improve the business?
The latest BSNL opportunity could help Tejas rebuild revenue after the sharp FY26 decline. If the detailed purchase order is issued and execution progresses as planned, it could provide a meaningful addition to the company’s revenue pipeline.
However, the size of the order alone does not resolve the company’s financial challenges. The earlier BSNL project itself demonstrates how revenue can fluctuate sharply depending on project execution and order timing. The company’s annual report also notes that a significant portion of its revenue comes from a small number of customers, which can result in quarterly fluctuations and seasonality.
Therefore, the key variables to monitor are order conversion, execution speed, margins, working-capital requirements, cash generation and debt reduction.
Diversification beyond BSNL will also matter
Tejas is also attempting to reduce its dependence on large domestic projects by expanding its wireline and wireless portfolio. In FY26, the company won additional BharatNet Phase III packages and became a leading supplier of IP/MPLS routers for the project. It also reported traction in 400G/800G optical products, FTTx, 5G products and international wireless markets.
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During Q1 FY27, the company also reported its first commercial win for an end-to-end 5G network deployment in South America, along with demand for fibre broadband, packet and optical transmission products from carriers and utilities.
This diversification is relevant because a recovery driven only by one large customer or project could leave the company vulnerable to another sharp revenue decline once that project is completed.
What needs to change for a sustained recovery?
The latest BSNL LoI gives Tejas Networks a new potential revenue stream, but the financial recovery will depend on what happens after the order is announced.
The first trigger would be the conversion of the Rs. 1,537 crore LoI into a detailed purchase order and subsequent execution. The next would be the pace at which the order translates into quarterly revenue.
Beyond revenue, improvement in gross margins is important because FY26 saw the company’s gross profit turn negative. At the same time, lower inventory provisions and warranty costs could help normalise profitability.
Finally, the company needs to manage its Rs. 4,277 crore net debt and high working-capital requirements. If higher order execution results in stronger operating cash flows, it could help address the balance-sheet pressure.
In this context, the BSNL order is significant, but it should be viewed as one part of the recovery equation. The stock’s fundamentals would need to show improvement through sustained revenue growth, better margins, stronger cash generation and debt management before the full impact of the new order can be assessed.