Tejas Networks sees domestic market growing faster for it than exports

Telecom product firm Tejas Networks expects its short-term growth driven by demand in the India market, as opposed to abroad, led by government-funded projects. 

The Bengaluru-based company, also promoted by serial entrepreneur and technocrat Gururaj Deshpande, get about 65 per cent of its revenue from India. International markets account for the rest.

“This year, India will be bigger than that (65 per cent), as the market here is growing very fast and we have not been growing the international business as much as we are growing in India right now,” said Sanjay Nayak, managing director (MD). 

Adding: “We are expecting our net profit margin to improve at least 200 basis points in the next couple of years, to cross 15 per cent, as software content in optical network equipment is constantly improving, with significant value additions to cater to the increasing data demands.” In the quarter ended December, the net profit margin was 13.3 per cent, from 12.5 per cent in the previous quarter. Consolidated revenue grew 5.2 per cent sequentially, to Rs 22.61 billion. “As long as data demand continues to grow, you have to need more optical networks because that is the only way when we can carry more data,” said the MD.

According to a report by research firm Ovum, this country is expected to be a $1 billion per year optical network equipment market by 2022, as compared to around $600 mn now. Making it the fastest growing, globally, in this segment. 

In the next two years, the major growth in India for Tejas is expected to be driven by the government. The latter is in the process of starting the second phase of BharatNet, a project which aims at high-speed broadband connectivity to every village. In the second phase, the government intends to connect 155,000 gram panchayats, for which a plan outlay of Rs 340 bn has been earmarked. 

Tejas has been selected as one of the vendors to supply optical fibre network equipment for the entire project, apart from ITI and Larsen & Toubro. “In terms of size, BharatNet-II is one and a half times larger than BharatNet-I. Beside, many states are  building additional networks, on top of BharatNet-II. So, our addressable market for equipment could be Rs 30-50 bn, which will be spent in the next 18-24 months,” added Nayak. 

Tejas has started investing in research and development, keeping an eye on the demand expected with the next generation, 5G, network; the technology standards for 5G are being discussed. The company expects all its products to be 5G-ready when the technology becomes a reality.