Tejas Networks (TEJASNET) Q4 18/19 earnings summary

Executive summary

• FY19 delivered 18.5% YoY growth in consolidated net revenue to ₹876.73 crore, with higher gross margin, operating profitability and PAT.

• International revenue contribution rose to 21%; business diversification improved, though delayed collections from a large public-sector customer sharply weakened cash conversion.

Financial highlights

• Consolidated net revenue ₹876.73 crore, up 18.5% YoY; gross profit ₹366.06 crore, up 22.1%, with gross margin at 41.8% versus 40.5%.

• EBITDA ₹196.21 crore, 22.4% of net revenue versus 20.7%; EBIT ₹130.33 crore, up 42%; PBT ₹150.02 crore, up 41.5%.

• PAT ₹147.24 crore, up 38.2%; basic EPS ₹16.13 versus ₹12.41. FY19 net tax expense was ₹2.78 crore versus a ₹0.48 crore tax credit in FY18.

• Product revenue rose 23.4% to ₹817.45 crore; service revenue declined 26.5% to ₹56.87 crore, mainly on lower BharatNet installation and commissioning revenue.

Outlook and guidance

• Medium-term target: international markets to contribute more than 50% of revenue; international share was 21% in FY19, with management expecting the rising contribution trend to continue.

• Management expects delayed BharatNet-related collections to normalize DSO during FY20; overdue amounts were partially collected, with funds set aside from the USO Fund.

• Backlog was ₹418 crore at Mar. 31, 2019; ~45% expected to convert to revenue within one year, with the remainder thereafter.

• Growth priorities include India private-network wins, international direct sales, continued R&D investment and improved working-capital efficiency.