Anand Athreya: Yes, we had strong revenue growth in Q4 and that is primarily driven by BSNL, but there are also other customers that we deliver to. So, in general, we executed very well across all of our product segments.
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Even in the next three quarters when you are executing the BSNL order, can we expect a similar EBITDA margin run rate of 13% or do you think there is scope of further expansion?
Anand Athreya: We normally do not give guidance on margins, but we will always strive to build better products, cheaper and manage our expenses. So, yes, that is going to be the focus of the company.
I want to understand what is the overall outlook when it comes to the order book? Does that stand around Rs 8,200 crore? How much of this is related to BSNL?
Arnob Roy: Yes, of course, a good part of it is related to BSNL, but there is a significant amount of order book which is for other customers and for our wireline products. I also want to mention that the order book is mainly the business that we have won and tenders that we have won which we have to execute. But a good part of our business is also what we call run rate business which are purchase order which come in a quarter and which are executed throughout the year in the next quarter and stuff like that. This is only one part of the business outlook that you see. This is like tenders or a fixed business which you have to execute.
We want to understand a bit more how the BSNL order is expected to be executed over the next three quarters? Beyond that, what is going to be happening?
Arnob Roy: As I said, we have an order book and we see a good pipeline of business opportunities coming in the coming year. In India, of course, there are a lot of 5G upgrade opportunities, as well as the expansion, the investments in terms of broadband, in terms of upgrading the backbone capacity of the private operators as they expand their broadband services and for the 5G networks. Those are all great opportunities for us in India.
Then, there is BharatNet, which is a very strong opportunity where we have very relevant products, that is just in India, but internationally, there is a lot of focus in growing our business and similar kind of opportunities of products where we leverage the broadband expansion that is happening in the US, Europe, as well as the 4G, 5G developments which are peaking in a lot of the emerging markets across the world. Those are all great opportunities for us to leverage fully during this current financial year.
You did point out BharatNet 3. Tell me, what is the opportunity size? The government has already started the process. When will the orders start trickling in?
Arnob Roy: As of now, the tender specifications are out and all the prospective bidders are going through those questions and clarification process, so that is going on. As soon as that finishes, we expect the tendering to happen, maybe in this quarter or early next quarter and then I think once the tendering thing is out, towards the later part of this year or early next year, this is when the revenues and the supplies are going to start and that is the timeline that we are looking at. In terms of the opportunity size, it is still a significant number. We see our total addressable size as about $500-600 million but it is yet to be seen based on the final bill of material that gets finalised.
Currently you are executing BSNL 4G projects. Has there been any talk on BSNL 5G?
Anand Athreya: There is an upgrade that is going to happen after the 4G gets deployed, so that is an opportunity and then the 5G radios will come after that and that is a separate tender and we hope to participate and win that too.
There is a move all over the globe towards replacing Chinese telecom equipment. What is your thought on that? Are you getting any traction or inquiries on that front or is there anything interesting that we should be looking at?
Anand Athreya: I think that is an opportunity to be another credible supplier, not only to India, but to the world, so we see that as an opportunity. And yes, there are interests from other private telcos or other telcos in the world. In fact, we are participating in the proof of concept with one of them and as we execute BSNL, we hope to get a lot more interest and opportunities in other service providers, not only in India but also around the world.
Arnob Roy: And if I may add, this replacement opportunity is also for a lot of our wireline equipment where operators across the world are in the process of replacing all of them. One is growth on those equipment and building on top of that as well as replacing many of them and we see a lot of those opportunities that get accessible to us. As Anand mentioned, the wireless equipment and as well as in wireline, there are significant opportunities of replacement.
After concluding their fundraise, Vodafone Idea has recently concluded their fundraise, they say they are going to be using the funds for 4G and 5G expansion. Have there been any initial talks with them that you guys have had?
Anand Athreya: Look, we cannot reveal the customer’s name, but all I can say is there is a lot of interest with the private or non-government service providers in India and elsewhere.
Any sense in terms of a timeline or what this could potentially look like?
Anand Athreya: Again, we are participating. Now we have a seat at the table because we have a complete portfolio and my belief is that once we begin to execute the BSNL order, which is well underway, a lot of the other service providers will open up. So, in terms of timeline, I would say later this year or next calendar year, we can hope to see things coming in.
Chip shortage issues were going on. Has that been resolved or are we seeing a reduction in the problem over there? Do you have any thoughts on Tata entry into the semiconductor chip manufacturing space? How does that benefit the company?
Arnob Roy: The chip shortage problem came up during Covid. I think we are seeing the tail end of that. Right now, a lot of the supply shortages have gone away. Lead times have reduced significantly. A few of them have long lead times, but I think those are predictable. I mean, they are not wild swings in terms of lead times or supply quantities.
So, from that point of view, we are able to plan our supply chain much better, and so that is the first part. Second is regarding Tatas’ investment. The Tatas are investing a lot in semiconductor manufacturing and as far as we are concerned, in our subsidiary, Saankhya Labs, they have a strong investment in semiconductor development. A lot of the chips that they actually design and manufacture are used in some of the existing satellite communication equipment and some of the newer chips that are designing Subsequently when we evolve our products we hope to leverage them in building a lot more efficiencies in our product out of whatever semiconductors are coming out from there.
Overall, we are seeing very good growth in FY24. Revenue standard around Rs 2,300 crore, FY25, FY26. Could you give us an indication the growth rate that one could expect? Where do you see the revenues headed, given that you already have a strong order book?
Anand Athreya: We do not normally give guidance, so I cannot give you a number. All you can expect is that we will continue to execute flawlessly. The supply chain is managed extremely well under good control and then we have a healthy order book, so you can expect us to execute that order book and add more to the kitty as we go.