Tejas Networks reported mixed Q3FY26 results with revenue growth offset by significant losses, as the company navigates a transition phase while awaiting major order executions and pursuing international expansion opportunities.

Financial Performance Overview

The company delivered revenue of ₹307.00 crores in Q3FY26, marking a 17% quarter-on-quarter increase from ₹262.00 crores in Q2FY26. However, profitability remained under pressure with a net loss of ₹197.00 crores for the quarter.

The revenue composition showed 85% contribution from Indian customers and 15% from international markets, while the order book remained predominantly India-focused at 92%.

Business Segment Performance

The quarter's revenue growth was primarily driven by wireline product sales to Indian private telecom operators and international customers. The company secured additional packages for BharatNet, becoming one of the largest suppliers of IP/MPLS routers by package count. Expansion orders were received from leading private telcos in India for both WDM and GPON equipment.

Significant international wins included a WDM backbone network order from a broadband ISP in Africa and a network transformation project for MPLS-TP products from a power sector company in Southeast Asia. The company also achieved its first win in sovereign data center networking applications in India for switching products.

Wireless Business Development

While wireless revenue remained limited in Q3FY26, the company reported increased international engagements for 4G and 5G RAN equipment. Multiple proof-of-concepts have progressed to commercial negotiation stages across various markets. The company was selected as a 5G RAN supplier for a section of the Delhi-Mumbai railway corridor pilot project under the Kavach initiative.

Operational and Strategic Updates

The company received ₹85.00 crores as PLI incentives for Q4FY25, bringing cumulative FY25 PLI to ₹397.00 crores. Innovation efforts continued with 26 patents filed in Q3FY26, taking the total to 613 global patents with 370 granted. The company's converged broadband product won the Excellence Award for most innovative product at a Dubai conference.

Inventory levels remained elevated at ₹2,363.00 crores, primarily due to procurement for the anticipated BSNL 4G expansion order. Trade receivables decreased to ₹3,284.00 crores from ₹4,026.00 crores in Q2FY26, while net debt improved to ₹3,349.00 crores from ₹3,738.00 crores.

Market Outlook and Challenges

The delay in BSNL's 4G expansion order continues to impact financial performance, with management indicating the project will likely execute in the next financial year due to operational readiness requirements at BSNL. However, the company maintains a positive long-term outlook driven by technology transitions, AI-driven data growth, and expanding 4G/5G networks in emerging markets.

International partnerships with NEC and Rakuten are facilitating wireless product expansion globally, while the company sees increasing adoption of wireline products among Indian private telcos. The transition from government-focused to private and international customer base aims to improve working capital cycles and margins.

Tejas Networks has reported significant financial losses despite its major deployment success with BSNL, as delayed orders continue to impact the telecom equipment manufacturer's profitability. The Tata group-backed company, which deployed a 4G network across approximately 100,000 sites for Bharat Sanchar Nigam Ltd (BSNL) in 2024-25, is now grappling with prolonged financial struggles due to order execution delays.

Financial Performance Deteriorates

The Bengaluru-based firm's financial results showed a marked deterioration in the December quarter. The company has been forced to maintain sticky inventory levels exceeding ₹2,300 crore for four consecutive quarters, resulting in quarterly losses driven by severe revenue constraints.

*Calculated based on 88% decline
**Nine-month period comparison

BSNL Order Delays Create Inventory Burden

For nearly a year, Tejas Networks has been waiting for BSNL's ₹1,526 crore "add-on" order for 18,685 additional sites. The company first discussed being in advanced stages of discussions with BSNL for the add-on offer in April 2025 during an earnings call. On May 21, 2025, it informed stock exchanges that it had received an add-on advance purchase order from BSNL for the supply, deployment, and maintenance of a 4G mobile network at 18,685 sites, with an order value pegged at ₹1,526 crore. However, the final order has not been received yet.

According to Arnob Roy, executive director and chief operating officer, the delay stems from BSNL's lack of operational readiness for rolling out the network. "Earlier, a lot of this inventory had actually been procured for executing on the BSNL 4G add-on order, for which our partner Tata Consultancy Services Ltd (TCS) has received an APO (advanced purchase order)," Roy explained during the December-quarter earnings call on January 9.

Market Impact and Investor Concerns

The weak financial results significantly impacted the company's share performance. Tejas Networks' shares closed 8.9% lower on Monday at ₹380 on the National Stock Exchange (NSE). The stock has declined 61.7% in 2025 from ₹1,185.70.

During the earnings call, investors and analysts raised concerns about the company's financial model, noting that inventory levels are currently double the order book size of ₹1,329 crore. This has created an extended working capital cycle that has yet to yield returns for shareholders. Questions also mounted about the company's cash runway, given recurring EBITDA losses of approximately ₹150 crore.

Business Diversification and Future Outlook

Despite the BSNL dependency, Tejas Networks is working to diversify its customer base. In December 2024, the company announced a three-year contract with Vodafone Idea Ltd to supply products for the telecom operator's backhaul capacity and improve network performance.

Roy emphasized that BSNL projects serve as a platform rather than a lifeline for the company. "The plan for the company is really to take this global, to take it to private telecom operators, to international operators," he stated. The company is seeing increased international engagements for its 4G/5G radio access network (RAN) equipment, including multiple ongoing proofs-of-concept and commercial negotiations across Asia Pacific, Latin America, Africa, and Europe.

Leadership and Strategic Challenges

The company continues to operate without a CEO, a position that has been vacant for approximately three quarters since Anand Athreya's resignation. Roy assured that regular business operations remain unaffected, with the board actively working on the appointment.

Faisal Kawoosa, chief analyst at Techarc, highlighted the company's heavy dependency on BSNL as a concern. "The company's success story is limited, given that major private telecom operators have not been using their equipment. The company needs to focus more on research and development to leapfrog innovation," Kawoosa noted. He also pointed to higher competition in the global telecom gear market, particularly from Chinese players, as a potential complication for international expansion plans.