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Tejas Networks makes quiet debut, lists at Rs 257 on BSE

NEW DELHI: Tejas Networks made a quite debut on BSE on Tuesday as the scrip got listed at its issue price of Rs 257.

The initial public offering (IPO) of the second largest optical networking products company had been sold between June 14 and 16 in the ₹250-257 range. The issue was subscribed 1.88 times.

At the listing price, the stock was valued at 14.1 times EV/EBITDA, and 24.7 times P/E for FY17 on a post-dilution basis.

“Companies in the optical fibre space such as Sterlite TechnologiesBSE 2.84 % are trading at 11.4 times EV/EBITDA and 30.5 times P/E on FY17 basis. Given the differentiated business model of the company and relatively short track record of improving financials (last two years only), it is difficult to take a call on valuation,” Centrum Broking said in a note.

Revenue growth of the company more than doubled to Rs 878.2 crore between financial years 2014-15 and 2016-17. However, bottom line growth remained volatile during the period. In FY15, the company reported a net loss of Rs 17.9 crore due to R&D investments. In FY17, it registered a net profit of Rs 63.2 crore after writing off Rs 30 crore worth of R&D spends. Operating margin before depreciation (EBITDA margin) improved to 20 per cent in FY17 from 18 per cent in FY16.

Tejas Networks is into developing and selling high-performance products to telecom service providers, utility companies, defence firms and government entities, among others. It has presence in over 60 countries,

Citigroup Global Markets India, Nomura Financial Advisory and Securities (India) Edelweiss Financial Services and Axis CapitalBSE -2.38 % were the book running lead managers for its offer.