Tejas Networks September quarter net jumps 68% on higher data use

Operating profits grew by 61% to Rs 25.72 cr on higher demand for data service infrastructure

Higher use of internet on mobile phones helped Tejas Networks report 68 per cent jump in net profit at Rs 26.87 crore during the July-September quarter.

The Bengaluru-based telecom equipment provider posted net profit at Rs 15.99 crore on revenues of Rs 214.31 crore during the corresponding period last year.

"We continue to see strong growth led by India... driven by strong usage of mobile data as well as broadband by consumers, businesses and government. Wherever there is a shift from voice-based to data-based economies it results in a huge need for optical-based network, and that is an opportunity for us," said Sanjay Nayak, Managing Director and CEO, Tejas Networks.

Operating profits grew by 61.2 per cent to Rs 25.72 crore on higher demand for data service infrastructure, while margin was at 13.6 per cent during the second quarter, compared with 10.2 per cent in the year-ago period.

In India only 20 per cent of the cell sites are using optical fibre technology with the rest of the sites using older microwave technology. This is in stark contrast with China where the usage ratio is 80:20 optical fibre and microwave, said Nayak. He expects Tejas Networks to benefit from this backlog demand as well as the requirement for higher data storage capacity across the sites including upcoming requirements for 5G infrastructure.

"India, being the world's fastest growing optical networking market in India for the next five years or so due to pent up investment in this area. We had a guidance of 20 per cent YoY growth on topline which we continue to maintain," added Nayak.

For the first half (April-September 2017), revenues grew 33.5 per cent to Rs 415 crore. "For the first half of the year, our net profit stood at Rs 47.31 crore and we generated cash of Rs 94.72 crore from operations. As on September 30, 2017, our cash and cash equivalents amounted to Rs 381.52 crore," said Venkatesh Gadiyar, CFO, Tejas Networks.

While majority of the company's clients in India are telecom giants, apart from the Union Government, Nayak doesn't see any reduction in business from the telcos since there is higher investment in the optical transmission infrastructure.

Tejas Networks is also focusing on emerging markets such as Africa, Latin America, Bangladesh, Cambodia, Malaysia and Vietnam as major growth destinations.

The company recently hired N R Ravikrishnan as General Counsel and Chief Compliance officer who served a similar role at Infosys Group. Tejas Networks is setting up a new facility in Mexico to complement a stronger sales strategy in the region including in the US.

The company said it would shut down a "dormant" business in Israel which was acquired about a decade ago.