Tejas Networks Shares Slump After Biggest Quarterly Loss Since Listing

Tejas Networks Ltd. posted its biggest ever quarterly loss since listing on lower sales and deferred tax reversal.

The telecom gear maker reported a net loss of Rs 112 crore in the quarter ended December against a profit of Rs 33 crore last year, according to its exchange filing.

The company’s topline more than halved over last year as its revenue from government orders fell. Its India government business—which contributed 55 percent to the company’s overall revenue in the last financial year—tumbled 86 percent year-on-year in the nine months ended December.

During the quarter, Tejas Networks also lowered the deferred tax assets on its balance sheet by Rs 98 crore, resulting into higher tax costs. That, according to the company, was a part of the ongoing review of the deferred tax assets. The reversal of deferred tax assets was on account of reduced profitability outlook, the company said in the presentation accompanying the filing.

Owing to these two factors, the company doesn’t expect to remain profitable for the ongoing financial year. But it expects a “strong fourth quarter” for its international business, according to the presentation. To be sure, Tejas Networks’ revenue from international business declined 17 percent year-on-year in the first nine months of 2019-20.

The company also expects its cash position to improve by March 2020. It has started collecting old overdue payments from BSNL for BharatNet—the government’s rural broadband connectivity programme. During the quarter, it received Rs 41 crore.

On Wednesday, shares of the company fell as much as 9 percent intraday—the most since Nov. 22, 2019—compared with a 0.3 percent drop in the benchmark Nifty 50 Index. The stock pared some of the losses to end 8.47 percent lower at Rs 82.65.