Tejas Networks vs. HFCL: Which Telecom Stock Should You Bet On?
Tejas Networks vs HFCL: The Indian telecom industry is undergoing a massive transformation with the rapid adoption of 5G technology and digital infrastructure expansion. Two prominent players in this sector, Tejas Networks and HFCL, are making significant strides in this space. Investors looking for potential multi-bagger stocks in the telecom sector often compare these two companies.
This article will dive into a detailed comparison of Tejas Networks vs. HFCL, analyzing their business models, financial performance, growth prospects, and stock valuation to determine which stock could be a better bet for investors.
Tejas Networks: A Strong Player Backed by Tata Group
Business Overview
Tejas Networks specializes in designing and selling networking products for wireless and wired communication across the globe. The company caters to telecom operators, ISPs, enterprises, utilities, defense, and government agencies. Its product portfolio includes:
- Fiber and mobile broadband solutions
- Ethernet switches and routers
- Optical transport systems
- Network management software
A major catalyst for Tejas Networks is its acquisition by Panatone Finvest Limited, a subsidiary of Tata Sons. This backing provides financial stability and credibility, helping the company expand aggressively.
Growth and Expansion Strategy
Tejas Networks is making a strong push into 5G and aims to complete BSNL’s first one lakh site order in FY25. The company’s management has projected strong revenue growth in Q4 FY25 and FY26, driven by:
- BSNL’s 5G network deployment
- Vodafone Idea’s expansion plans
- International deals in the US, Middle East, Africa, and Latin America
Despite challenges in revenue recognition, Tejas Networks continues to invest in R&D, allocating Rs 6 billion to innovation, which should enhance its product portfolio and market competitiveness.
Financial Performance
Tejas Networks has witnessed tremendous revenue growth in Q3 FY25:
| Metric | Q3 FY25 | Q3 FY24 | Growth (%) |
|---|---|---|---|
| Revenue | ₹2,655.98 Cr | ₹575.12 Cr | 361% |
| Net Profit | ₹165.67 Cr | (₹44.87) Cr (Loss) | Turned Profitable |
| Order Book | ₹2,681 Cr | — | — |
The company has successfully turned profitable, showing improved operational efficiency and better demand for its products.
HFCL: A Telecom Giant with Strong Government & Defense Contracts
Business Overview
HFCL Limited is a well-established telecom products and solutions provider in India, with expertise in:
- Optical fiber cables & telecom equipment
- Defense communication products (Wi-Fi access points, routers, electronic fuzes, surveillance radars)
- 5G network solutions
- Railway and smart city communication projects
HFCL has also partnered with Qualcomm to develop advanced 5G products, positioning itself as a key player in India’s 5G rollout.
Growth and Expansion Strategy
HFCL is benefiting from multiple government initiatives, including:
- Digital India (nationwide broadband and fiber connectivity)
- Production-Linked Incentive (PLI) Scheme (support for domestic telecom manufacturers)
- Smart City projects (large-scale infrastructure deployments)
The company is also expanding its global presence by launching new products internationally and increasing R&D spending to improve its technological edge.
Financial Performance
While HFCL continues to grow, its revenue numbers were flat compared to last year, and profits saw a slight decline:
| Metric | Q3 FY25 | Q3 FY24 | Growth (%) |
|---|---|---|---|
| Revenue | ₹1,031.99 Cr | ₹1,079.03 Cr | (-4.3%) |
| Net Profit | ₹72.58 Cr | ₹82.43 Cr | (-11.9%) |
| Order Book | ₹7,685 Cr | — | — |
Despite a massive order book of ₹7,685 Cr, HFCL’s profitability declined, raising concerns about margin pressures and operational costs.
Financial Ratio Comparison: Tejas Networks vs. HFCL
| Metric | Tejas Networks | HFCL |
|---|---|---|
| Market Cap | ₹14,153 Cr | ₹8,000+ Cr (approx.) |
| Current Price | ₹803 | ₹89 |
| Stock P/E | 21.3 | 26.4 |
| Book Value | ₹212 | ₹39.8 |
| ROCE | 3.68% | 6.47% |
| ROE | 2.06% | 4.28% |
| Debt to Equity | 0.78 | 0.56 |
| Pledged Percentage | 0% | 0% |
| EPS | ₹38.6 | ₹2.6 |
| Intrinsic Value | ₹654 | ₹72 |
| Order Book | ₹2,681 Cr | ₹7,685 Cr |
Key Takeaways from Financial Ratios
- Tejas Networks has stronger revenue growth but a lower return on equity (ROE) and return on capital employed (ROCE) compared to HFCL.
- HFCL has a larger order book but weaker recent revenue growth and declining profits.
- Tejas Networks is backed by Tata Group, which gives it a long-term advantage in attracting bigger deals and maintaining financial stability.
Final Verdict: Which Telecom Stock to Bet On?
When to Choose Tejas Networks
- If you’re looking for a stock with strong growth potential and a backing from Tata Group.
- If you want exposure to 5G expansion in India and global markets.
- If you prefer a company that has turned profitable and is expected to see higher revenue growth in the coming quarters.
When to Choose HFCL
- If you’re looking for a company with a massive order book, ensuring revenue visibility.
- If you prefer exposure to government and defense contracts in the telecom sector.
- If you want a company with a better return on capital employed (ROCE) and return on equity (ROE).
Overall, Tejas Networks appears to have a stronger growth trajectory due to its rapid 5G expansion, international deals, and Tata backing. However, HFCL remains a solid player in government and defense telecom contracts with stable revenue streams. Investors should weigh their risk appetite and investment horizon before making a decision.
Q&A: Quick Take on Tejas Networks vs. HFCL
Q1: Which company has a bigger order book?
A: HFCL, with an order book of ₹7,685 Cr, compared to Tejas Networks’ ₹2,681 Cr.
Q2: Which stock has better growth potential in 5G?
A: Tejas Networks, as it is aggressively expanding into 5G infrastructure, both in India and globally.
Q3: Which stock is backed by Tata Group?
A: Tejas Networks is backed by Tata Sons through Panatone Finvest Limited.
Q4: Which company is more profitable?
A: Currently, Tejas Networks is more profitable, reporting ₹165.67 Cr net profit in Q3 FY25, while HFCL’s profit declined to ₹72.58 Cr.
Q5: Which stock is a better long-term investment?
A: Tejas Networks seems to have stronger growth potential, but HFCL offers stability through government contracts. The decision depends on risk preference.
Which stock are you betting on? Let us know in the comments! 🚀
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.