Is Tejas Networks Building Its Future with an AI Supercycle or Burning Cash?

Synopsis: Tejas Networks reported rising losses despite modest revenue growth, driven by project delays and continued investments. While financial stress remains high, a strong order book and AI-led network demand outlook support future potential. The company’s strategy reflects a trade-off between near-term losses and long-term positioning in an emerging telecom supercycle.

FY 2026 performance by Tejas Networks shows a marked contrast between the existing financial pressures and future growth opportunities. Despite revenue growth, higher losses have been recorded due to project delays and heavy capital spending. 

However, there seems to be preparation by management of the company to take advantage of the upcoming shift that will be driven by artificial intelligence in telecom network technologies, which is predicted to usher in an infrastructure boom. The critical issue here is whether Tejas is gearing for the future or going beyond the limit.

A Year of Losses Despite Revenue Growth

In Q4 of the FY26, Tejas Networks‘ results have presented themselves in terms of a contrast, where a relatively modest growth in revenue coexists with a worsening trend on the bottom line. The quarterly figures show revenue of Rs 333 crore, compared to Rs 307 crore in Q3, which amounts to an increase of 8%. For the entire year, revenue was Rs 1,103 crore.

When it comes to profitability, however, the figures tell a completely different story. Net losses amounted to Rs 211 crore, compared to Rs 197 crore in Q3. Over the full year, the company incurred net losses totalling Rs 909 crore.

When looking at the company’s balance sheet, the problem becomes even clearer. The inventory figure stood at Rs 2,438 crore, while receivables were Rs 3,258 crore. In addition, the net debt was Rs 3,531 crore, while gross borrowings amounted to Rs 4,035 crore. The main question here, then, is whether these losses are a temporary result or something else entirely.

Order Book Growth Signals Underlying Demand

However, despite the financial losses, there is hope with the increase in the order book of Tejas Networks. The order book value of the company was Rs 1,514 crore by the end of FY26 against Rs 1,019 crore at the end of FY25.

A major chunk of the order book will be converted to revenues in FY27, which indicates visibility towards business recovery in the upcoming period. It is important to note that the order book does not include the BSNL 4G deal, implying diversification of orders from other clients apart from the public sector undertaking.

India continues to remain the mainstay of business, accounting for 88% of total revenues along with a sizable chunk of the order flow. The rising order book implies that the demand for Tejas’ products is steady, even as financials continue to lag behind.

A Transition Year Marked by Execution Delays

It was evident from the management’s perspective that FY26 would be the “year of consolidation”, given how the preceding FY25 had been execution-intensive, courtesy of the BSNL 4G deal. The firm required time to wind down on this dependency and broaden its customer base.

Unfortunately, this was not an easy transition for the company, as several key projects across the two categories of wireline and wireless took longer than expected. The resulting loss in revenues greatly contributed to the increased losses.

The delay in these much-needed revenues and existing costs made the difference in income and expense levels wide. It is important to note that the telecom infrastructure business carries inherent risks in execution, as seen in the example above. Therefore, the losses incurred in FY26 could not only be attributed to inefficient operations.

Heavy Investments Continue Despite Losses

Another important point regarding Tejas Network’s strategy is the continuation of investments despite experiencing losses. The management made it clear that Tejas Network had not reduced its investments during FY26 because of its future vision.

It is a strategic decision by the company that focuses more on the future than being profit-driven. Investments in the business were mainly aimed at innovation and the expansion of next-generation networks.

Although such an approach puts Tejas under financial strain, it gives it a chance to benefit from future developments. But at the same time, it exposes the company to risks, particularly due to its high level of debts and negative cash flow. The million-dollar question is how these investments will bring future returns to compensate for the present losses.

AI as the Catalyst for a Network Supercycle

AI as a transformative force for telecom networks is another critical issue addressed in management commentaries. It is believed that the application of AI will trigger what is known as a “network infrastructure build supercycle”, significantly changing the nature of traffic flow and network needs.

According to estimations, AI traffic will represent more than 60 per cent of all traffic flowing through networks. Also, in 2035, there will be more than 100 million AI-powered devices connected to the network.

Another important aspect of changing network needs is data traffic direction. While today’s networks are characterised by predominantly downstream data flow, tomorrow’s networks will see the growing dominance of upstream traffic due to AI applications and edge computing. All the above-mentioned trends can become a great source of opportunity for Tejas Networks.

Product Positioning for Future Network Demand

Tejas Networks has ensured that their product roadmap is consistent with this. This includes the provision of optical systems that can deliver up to 1.2 terabits per channel and will be scaled to 1.6 terabits and beyond, offering high-bandwidth connectivity for data centres. Likewise, its edge systems include computing functionalities, facilitating edge AI solutions.

Tejas Networks is also focused on delivering 5G and future 6G services, with products having the capacity to offer higher uplink capacity for AI-driven solutions. From this forward-looking product strategy, it is evident that Tejas Networks intends to leverage long-term industry trends even as its performance is weak.

Expanding Global Footprint and Partnerships

Further still, Tejas Networks is making progress on expanding its reach worldwide. For example, it entered into agreements with vendors such as NEC for 5G massive MIMO radio products and also partnered with Rakuten Symphony on the development of Open RAN solutions.

It announced several trials on 4G and 5G products in South Asia and the Americas region, alongside a successful proof of concept of its 5G products in South America. This reflects early success in international operations.

Moreover, the company has managed to increase its innovation capabilities, recording 63 new patents filed in Q4, leading to 676 total patents filed by the company, with 371 patents having been issued. Overall, these initiatives reflect the strategic intent of Tejas Network to reduce dependence on the home country and develop a worldwide customer base.

Balancing Margins Amid Cost Pressures

Despite favorable prospects for growth, Tejas Networks experiences some problems related to higher costs. As a result of increasing prices on memories and chips, there was a rise in the cost of inputs; however, according to the managers, memory forms a minor part of the total production cost.

Tejas Networks tries to handle the situation by making price adjustments with their clients and partners through negotiations as well as signing contracts ensuring stable pricing periods.Nevertheless, the margin visibility still remains questionable given ongoing investments and delayed income recognition.

Conclusion: Building for the Future or Burning Cash?

Tejas Networks finds itself at a crucial turning point in its business. Firstly, the company is experiencing losses, a high level of debt and problems connected to delayed projects. Nevertheless, it is actively investing in solutions which align with future trends in the industry, namely in the sphere of artificial intelligence in telecommunications.

The increasing order backlog, the expanded product line and the establishment of international cooperation demonstrate that Tejas Networks is preparing to capitalise on upcoming trends. In particular, the arrival of an AI-based network supercycle may result in great sales for the firm.

That being said, the company’s success will depend greatly on its ability to manage order books efficiently, keep expenditures under control and implement innovations commercially.

Thus, in conclusion, Tejas Networks has decided to take a risk and prioritise investments which have potential for creating great future profit over short-term earnings. It remains to be seen whether this strategy will pay off.

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