Emkay Global Financial's research report on Tejas Networks
Tejas Networks (Tejas), India’s largest R&D-driven telecom equipment company, designs and manufactures wireline/wireless networking products. We expect Tejas to execute orders worth at least Rs292bn over FY24-28E, and generate revenue/EBITDA above Rs300bn/Rs60bn, respectively, led by the BSNL and BharatNet projects. We see revenue peaking in FY25 and settling at ~5x FY24 levels. Tejas is expected to benefit chiefly from: 1) GoI emphasis on domestic manufacturing and the PLI scheme; 2) large spends on BSNL, BharatNet and the Railways; 3) increasing demand in critical infra/India private sector; and 4) global move to replace Chinese telecom equipment.
Outlook
We initiate coverage on Tejas with a BUY recommendation and DCF-based TP of Rs1,050 (WAACC: 10.5%; terminal growth: 6%), implying 14.3x P/E (Dec-24E).
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