Target: ₹1,050

CMP: ₹865.90

Tejas Networks, country’s largest R&D-driven telecom equipment company, designs and manufactures wireline/wireless networking products.

We expect Tejas to execute orders worth at least ₹29,200 crore over FY24-28, and generate revenue/EBITDA above ₹30000 crore/₹6,000 crore, respectively, led by the BSNL and BharatNet projects. We see revenue peaking in FY25 and settling at about 5x FY24 levels.

Tejas is expected to benefit chiefly from: GoI emphasis on domestic manufacturing and the PLI scheme; large spends on BSNL, BharatNet and the Railways; increasing demand in critical infra/India private sector; and global move to replace Chinese telecom equipment.

Besides, Tejas is set to benefit from: cost-competitive R&D vs. peers, asset-light model with EMS partners, Saankhya Labs’ acquisition for wireless solutions, CEO Anand Athrey’s 35-year, US-based work experience likely to provide new connects; new reference opportunity from Tata Group companies (TCS, TCom); and Tata Group’s semiconductor foray could give an added boost.

We initiate coverage on Tejas Networks with a BUY recommendation and DCF-based TP of ₹1,050.