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Tata Group’s Tejas Networks Falls 9% Despite Profit Surge in Q3 – What’s Next?

Tata Group's Tejas Networks Falls 9% Despite Profit Surge in Q3

Shares of Tejas Networks Ltd, a Tata Group company, dropped sharply by 9% on Friday, slipping below the Rs 1,000 mark to touch Rs 994.05 on the Bombay Stock Exchange (BSE). The decline followed the company’s announcement of its Q3 earnings, despite reporting a profit of Rs 165 crore, a remarkable turnaround from a loss of Rs 44.87 crore in the same period last year.

This sharp drop erased a chunk of the company’s market capitalization, which now stands at Rs 17,619 crore. While the company showed impressive growth in profits and sales, several underlying factors contributed to the stock’s decline.


What Are the Key Financial Highlights of Q3 for Tejas Networks?

Tejas Networks posted a strong set of numbers for the December 2024 quarter:

While these numbers are impressive, the sharp rise in inventory indicates potential inefficiencies or challenges in project execution, which may have spooked investors.


What Do the Technical Indicators Say About Tejas Networks?

From a technical analysis perspective, Tejas Networks shows signs of weakness in the short term:


How Has Tejas Networks Stock Performed Historically?

Tejas Networks has delivered strong long-term returns, even after today’s decline:

At the current level, the stock has dropped 33.13% from its 52-week high, raising questions about whether it is entering a correction phase or presenting a buying opportunity.


What Challenges Is Tejas Networks Facing?

Despite its strong financial performance, Tejas Networks faces some challenges that may have triggered the stock’s decline:

  1. Inventory Build-Up:
    Inventory surged significantly to Rs 2,683 crore, indicating potential delays in project execution or sales realization.
  2. Scaling Operations:
    The company is investing heavily in scaling its R&D teams and operational capacity to manage large projects, which may weigh on margins in the near term.
  3. Investor Sentiment:
    The stock’s sharp decline could also reflect profit-booking by investors or concerns about its ability to sustain growth rates.

What Does Tejas Networks Do?

Tejas Networks designs and manufactures optical and data networking products for a wide range of clients, including:

The company has a global footprint, with its products sold in over 75 countries, showcasing its ability to cater to diverse markets.


Table: Key Metrics for Tejas Networks Stock

Metric Value
Current Price (BSE) Rs 994.05
Previous Close (BSE) Rs 1,096.75
Market Cap Rs 17,619 crore
52-Week High Rs 1,495.10 (June 27, 2024)
52-Week Low Rs 652.05 (March 28, 2024)
1-Year Performance +27%
3-Year Performance +152%
Inventory Levels Rs 2,683 crore (Q3 2024)
RSI 44.2 (Neutral Territory)

FAQs

Why did Tejas Networks shares fall 9% after Q3 earnings?

The stock fell due to investor concerns over inventory build-up, despite strong revenue growth and a profit of Rs 165 crore in Q3.

How has Tejas Networks performed in the last year?

Tejas Networks shares have gained 27% in the past year but are down 33.13% from their 52-week high.

What is the significance of the inventory build-up?

The significant rise in inventory to Rs 2,683 crore indicates potential delays in project execution or sales realization.

Is Tejas Networks experiencing volatility?

With a beta of 1.8, Tejas Networks has low volatility, but the recent sharp drop raises concerns about short-term stability.

What does the RSI of Tejas Networks indicate?

The RSI of 44.2 suggests the stock is trading in neutral territory, neither overbought nor oversold.

Should investors be worried about the stock’s decline?

The stock’s drop could be due to profit booking or concerns over operational challenges. Long-term prospects depend on the company’s ability to manage growth efficiently.

What does Tejas Networks specialize in?

Tejas Networks designs and sells optical and data networking products to clients in telecommunications, utilities, defence, and government sectors.

Click here to know more.

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