Tejas Networks plunges 14% to hit record low on weak June quarter results

The company reported a sharp 87 per cent drop in its consolidated net profit at Rs 6 crore in June quarter, due to weak revenue on deferment of spending on government projects.

Shares of Tejas Networks plunged 14 per cent to Rs 111, also its all-time low on the BSE on Thursday, after it reported a sharp 87 per cent drop in its consolidated net profit at Rs 6 crore in June quarter (Q1FY20). The fall in profit came in on the back of weak revenue due to deferment of spending on government projects. The company had registered profit of Rs 45 crore in the year-ago period.

Consolidated revenue during the quarter under review declined 32 per cent year-on-year (YoY) to Rs 157 crore, primarily on account of steep decline in government business. The government business was 15 per cent of revenues during the quarter as compared to a 55 per cent in fiscal 2019. Operating margin contracted to 4.2 per cent in Q1FY20 from 19.5 per cent in Q1FY19.

Tejas Networks designs, develops and sells high-performance and cost-competitive networking products to telecommunications service providers, internet service providers, utility companies, defence companies and government entities in over 70 countries.

The stock was trading at the lowest level since its listing on June 27, 2017. Thus far in the calendar year 2019, it tanked 46 per cent from the level of Rs 207, as compared to a 5 per cent rise in the S&P BSE Sensex. It hit an all-time high of Rs 472 on January 9, 2018.

The company had raised nearly Rs 777 crore through the initial public offer (IPO) by issuing shares at Rs 257 apiece.

At 09:51 am, Tejas Networks was quoting 13 per cent lower at Rs 112, against a 0.74 per cent rise in the benchmark index. A combined 169,388 shares changed hands on the counter on the BSE and NSE so far.