This Lesser-Known Tata Group Stock Soars by Over 80% in 7 Months, Outperforming TCS, Tata Steel, and Titan

10 Sep, 2023

This Lesser-Known Tata Group Stock Soars by Over 80% in 7 Months, Outperforming TCS, Tata Steel, and Titan

In the year 2023, various Tata Group stocks have displayed positive returns, including well-known names like Tata Consultancy Services (TCS), Tata Steel, Tata Motors, and Tata Power. However, among this esteemed list, a relatively lesser-known Tata Group entity, Tejas Networks, has emerged as a remarkable performer, showcasing an impressive return of 83% over the past eight months. This surge has positioned Tejas Networks as one of the top gainers within the group.

The share price of Tejas Networks, a company specializing in broadband, optical, and wireless networking solutions, soared to new heights, reaching an all-time high of ₹935 during intraday trading on the Bombay Stock Exchange (BSE). This remarkable ascent comes as a strong rebound from its 52-week low of ₹510.05 recorded on January 30, 2023.

Tejas Networks witnessed a substantial rally in its stock, rising by as much as 4.7% during intraday trading on the BSE. This surge was prompted by the company's announcement of receiving an advance payment of ₹750 crore from its sister company, TCS, for their joint involvement in the BSNL project. These funds are intended to be utilized for the supply of radio access network equipment required for the expansive Pan-India 4G/5G network being developed by BSNL.

The collaboration between Tejas Networks and TCS for the BSNL project was formalized on August 16, 2023. The agreement encompasses the supply, support, and annual maintenance services for Radio Access Network (RAN) equipment designed for BSNL's Pan-India 4G/5G network. The total worth of this contract is ₹7,492 crore, and it involves the provisioning of 4G/5G RAN equipment for an estimated 100,000 sites. The contract execution is scheduled over the calendar years 2023 and 2024.

Tejas Networks specializes in the design and manufacture of high-performance wireline and wireless networking products. These products cater to a diverse clientele, including telecommunications service providers, internet service providers, utilities, as well as defense and government entities. The company's reach extends across more than 75 countries, and it operates as a vital part of the Tata Group. Notably, Panatone Finvest Ltd., a subsidiary of Tata Sons Pvt. Ltd., holds a majority stake in Tejas Networks, with a current ownership share of 55.97%.

The rise of Tejas Networks in the market gained momentum following Tata Sons' acquisition of a controlling stake in the company. This strategic move occurred in July 2021 when Panatone Finvest entered into a definitive agreement to acquire a 43.3% stake in Tejas Networks for an approximate sum of ₹1,850 crore. The latest shareholding pattern data available on the BSE indicates that Panatone Finvest holds a commanding 55.97% stake in the company.

With a market capitalization of ₹15,325 crore, Tejas Networks has witnessed a remarkable surge in its share price since the Tata Group's stake acquisition, delivering returns exceeding 250%. Over the course of the past year, the company has provided investors with a substantial return of 42.6%, and in the current calendar year of 2023, its share price has surged by 49%. In the preceding six months alone, Tejas Networks recorded an impressive addition of 44% in its stock price, while over the span of a month, it registered a notable gain of over 8%.

However, it is important to note that for the April-June quarter of the fiscal year 2024, Tejas Networks reported a net loss of ₹27 crore. This represents a significant contrast compared to the same period in the previous fiscal year when the loss stood at ₹11.5 crore. Additionally, in the corresponding quarter of the preceding year, the net loss amounted to ₹6.3 crore. Despite these losses, the company reported net revenue of ₹188 crore for the first quarter of FY24, reflecting a substantial increase of 46.3% compared to the same period in the previous year. However, it is worth noting that this revenue declined by 37% sequentially.