Suyog Telematics Limited (537259) Earnings Call Transcript & Summary

Ladies and gentlemen, I welcome you all to the Q1 FY '26 Post Earnings Conference Call of Suyog Telematics Limited. Today on the call from the management team, we have with us Mr. Shushankar Lature, Managing Director; Mr. Tushar Shah, Business Head, India; Mr. Ajay Sharma, Chief Financial Officer; Mr. Suresh Lature, Business Development Manager; and Ms. Aarti, Compliance Head. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also a reminder that this call is being recorded. I would now request the management to quickly run us through the business highlights and performance highlights for the quarter ended 30th June '25, the growth plan and vision for the coming year, post which we'll open the floor for Q&A. Over to the management, sir.

Hi, everyone. I'm Tushar, I'm heading business for Suyog. I would like to first brief everyone about the business, what we have done in Q1. [indiscernible] completed 30 years in telecom, which is one of the biggest milestones we have seen all the ups and downs of the industry and we're able to sustain all the difficult times of industry. In Q1, BSNL percentage of revenue has increased drastically. It has reached 4.7% now. So which is -- as you all aware that Airtel and Jio are not doing any major CapEx in the industry as of now, but we are able to compensate it with the Jio, Vodafone and BSNL rollout. So in Q1, Airtel has contributed to 45.8% of revenue. Jio has contributed to 23.3%, Voda [indiscernible] 26.2%, and BSNL has done 4.7% of revenue. So which most of the IP were not able to compensate the revenue, [indiscernible] through BSNL and Vodafone rollout. In terms of the number of towers now, we have crossed 5,800 towers, and we have 7,107 tenancies across India. So we have also improved our tenancy ratio from 1.1 to 1.2, mainly because of Vodafone and BSNL rollout on existing towers which were occupied [indiscernible] Airtel. We have also crossed 6,000 kilometers of aerial fiber network and we have crossed 1,000 government tenancies. We have entered 612 sites which are ready for government PSU, which site is ready [indiscernible] not part of Q1 bidding since [indiscernible] on this site. So we have close to 700, 800 sites in Q1. In terms of the real [indiscernible] in last quarter [indiscernible] 31st March, we had acquired Lotus Tele Infra, which has given a big boost in Delhi Circle. So now Lotus Tele Infra is completely owned by Suyog, and we are managing the Lotus Tele Infra. So we are having very strong presence in Mumbai. Now we also, with the acquisition of Lotus Infra and Lotus Tele Infra doing almost 40 sites in Q2, we are increasing our presence in India, which is Delhi Circle. One of the biggest highlight is [indiscernible] which we have done drastically well in terms of rollout in last 2 quarters, and that has given us an excellent cash flow and margins in terms of Q1. BSNL officially declared 20,000 sites rollout in this financial year, which is up to March '26, end of March '26. You can see on the portal also, they are coming up with 20,000 sites by March '26. We are still working with them to target -- we are tentatively planning to do another 5,000, 7,000 sites of the 20,000 which BSNL has declared. I would like to focus right now with you on -- there are a lot of questions which we received from investors mainly on the satellite operator like Starlink. So it is very clear even the government of India has quoted that satellite operator will not bank any existing terrestrial network. They will majorly operate in an area which is not covered by telecom tower [indiscernible] area. Even if you see the capacity, a company like Starlink has a capacity of only 2 million customers for India. So with this, we are pretty sure that there is no impact on telecom operator, nor there is any impact on telecom tower industry. Even the is as high as INR 3,000 per month, which would very -- for only high-profile customers. In terms of technical issue, even very high tenancy when there's a direct signal. As of now, there's very high tenancy latency network. will also impact them badly. And in terms of tower, yes, they will -- they can complement our business by putting network to reduce this latency. So we don't see any threat of the satellite operator. We only get them to give us additional revenue when they start rolling out network in India. So in terms of a plan [indiscernible] we 5,000 to 7,000 4G micro sites for BSNL by March '26. Even Vodafone is discussing to roll out around 15,000 sites in this year, which approvals are still awaited. And we will see a major clarity in approval from Vodafone by start October or mid-October. So we will again increase our target. Right now, we want to add another 5,000 to 7,000 tenancies by March end for BSNL And then we get some clarity from Vodafone like we got from BSNL, we'll update our numbers for the rollout. In terms of financial, we have done very recent -- we have maintained our margins. EBITDA has gone very high. We have done a lot of upgrade because of which even though our revenue has increased, like other IP, our margin has not dropped. We have maintained our margins at 75%, 76% mainly because we have done huge upgrades for Bharti Airtel. So when I say I'm doing a lot of upgrades for Bharti Airtel, it means we are rolling out their 5G tenancy on existing 4G site. And we are doing a lot of battery upgrade and other infra, which gives us additional revenue, which directly hits our profit margin as we have already done CapEx for that upgrade when we install our site. My revenue -- stand-alone revenue was INR 516 million, EBITDA was INR 392 million with EBITDA percentage of 76%, which is one of the best in quarter. And the efforts which we have taken in the last 2 quarters to roll out BSNL site in terms very strong cash flow in Q1, which will be very helpful for us to roll out 5,000, 7,000 sites in next 2 quarters, which is Q3 and Q4. With such a strong EBITDA margin and very improved cash flow, we are very sure to achieve our target by March '26. And we can even overachieve our target. We have also quarter financials consolidated because we have acquired Lotus Infra on 31st March. So [indiscernible] Q1 which is applicable for consolidated financials. consolidated financials in terms of revenue is INR 546 million with EBITDA margin of 75.4% and net profit of 31.7%. So it has been one of the very strong quarter in terms of profit margin and upgrade and in terms of revenue and number of tower growth, we are very sure of Q3 and Q4 would be much, much higher. It would be the best in the history of Suyog. I hope all of you have seen the financials so I can open floor for question and answers for specific questions and answers, we can revert back to all your questions accordingly. Thank you, everyone.

[Operator Instructions] We will take the first question from the line of Doshil Pandya.

Sir, I wanted to understand since this quarter, we have hardly added 100-odd towers, and tenancies are also in the same similar range. Where do we see the pickup happening because we are supposedly add 10,000-odd towers? I understand that Q3 and Q4 will be heavy quarters. But for next 1 quarter and how things will we want to understand. And also wanted to understand on the debt part. Have we got any debt from the banks or how things are?

Sure, those are two things. First thing, we have done a decent -- we have not [indiscernible] 619 towers in Q1. Only thing is not part of bidding because bidding normally starts after 1 and 2 months when operator install their antennas and then they allow us to bid. So we have done 600-plus tower in Q1. So it's a good number in terms of current scenario. It will surely pick up from Q3 and Q4 because only BSNL planning 20,000-plus tower, Vodafone is planning around 15,000-plus towers. So in totality across industry, there will be 35,000 new tower. Out of it, obviously, we want to target 7,000 to 10,000 tower between Vodafone and BSNL.

No, my question was it was not about hardly but things like since we add towers after 1 or 1.5 months, we start the billing. So with respect to our targets, we are -- we might be somewhere below the number that we might be thinking of. That was the whole idea about asking the question.

When we say a tower, we normally have a target point. And if you see the history of telecom, any tower company, Q1 and Q2 are normally low because in Q1, all approvals gets through and Q2 because of rainy season are normally low. So 70%, 80% of towers year-on-year gets installed in Q3 and Q4. And with BSNL officially declaring 20,000 towers, I don't think that there is any question of not getting a tower anymore. [indiscernible] skeptical because there were numbers which we got from operator, but it was not officially declared and that was in progress. Now BSNL has got cabinet clearance. They have got funds to roll out 21,000 towers and has been shared on their website with the locations where they want tower. So action target is no more question. The question now remains how much we can go out of it. It will be based on the finance which we have and we can try and maximize this opportunity.

Got your point, sir. Sir, then obviously, funds will be -- we will need funds to take these orders or do it. So how are we placed right now? And what are we doing to...

So as of now, we have got close to INR 150 crore sanctions from Axis Bank and ICICI Bank, which are going to utilize in Q3. We have also improved our cash flow drastically in this quarter. So we have around INR 200 crores, INR 250 crores which we can utilize to roll out this tower from [indiscernible] escalate from BSNL. So we'll work and we will soon update what our plans to achieve 5,000, 7,000, 10,000 tower whatever we target in the next 2 quarters. We'll have a detailed plan and then we can update you accordingly. But yes, as of now, we have INR 200 crores, INR 250 crores which can be utilized.

Got it. Sir, last question. On the -- we were trying to get some orders from BSNL in June, July with respect to some EPC orders. Can you please share any update we have on this?

So in terms of EPC, the tender was canceled. But again, it has been floated, and now 25th August is the submission date for EPC tender. So let's hope that it gets closed by September, October, and then we can give you exact numbers in terms of how many towers we want to bring EPC.

Okay, got it. How big would be this tender? Any size?

In terms of in total, it's something around close to 20,000, 30,000 towers. But yes, they will not allocate to 1 party. It will be allocated to 3 -- 1 company can get only 3 circles. So we are again targeting around 4,000, 5,000 towers between 3 circles in EPC.

We'll take the next question from the line of Ankit

Sir, I have very basic 3 questions. I think one of them you have already answered but I'll just repeat simple [indiscernible] Sir, growth next 3 to 4 quarters, 6 quarters, [indiscernible] And I'm getting a feeling that the third part of the question is that given our past announcement of equity fundraise and then going back, are we really looking at a very good valuation and then go for equity fundraise? Or is it a conscious decision that we don't want to raise equity at all right now?

[indiscernible] answer all of the queries. First is [indiscernible] Growth will come from BSNL and Vodafone for now. [indiscernible] [Foreign Language] Planning somewhere around close to 15,000 towers, but they're not [indiscernible] confirmation. Confirmation will come by end of September between mid of October. So more or less, we are seeing industry size of 35,000 tower in next 2 quarters, which is up to March. So a target of 15,000 tenancies which we're seeing from last financial year, we are more or less very sure, at least we should cross 10,000 tenancies by March end and then another 5,000 tenancy can fall back in next quarter. We'll obviously try higher than 5,000, but we'll have to do a detailed planning of finance to roll out to share the exact number. Since [indiscernible] yesterday from BSNL [indiscernible] what exactly we are targeting for Q3 and Q4. In terms of [indiscernible] as I said, we have got, as of now we have clear visibility of INR 200 crores, INR 250 crores which we are going to utilize. Balance funding, we are closely working with all the banks. We are obviously speaking with a few of the big investors also. You all know that why we've withdrawn [indiscernible] which we have declared last time because post the declaration, market was crashed because of an unrolled reason which was not linked to Suyog. Again, we'll fundraise, and as of now, we have client exploring multiple ways to arrange funds because as we make around INR 500 crores, INR 800 crores of funds. So as and when we finalize something maybe in another month or so, we'll get back to you with the detailed funding. Answer all the questions.

We'll take the next question from the line of Mahit

Wanted to understand, this year, average revenue per tenancy, it is [indiscernible] going down from the last 3 quarters. So can you please give some idea when are we expecting the tenancy [indiscernible] revenue for tenancy to go from previous levels?

It has already gone high in this quarter. If you see compared to Q4 versus Q1 our tenancy, revenue per tenancy has improved. Second [indiscernible] to rule out for BSNL, again, our revenue per tenancy will improve in Q3, Q4. [indiscernible] will increase compared to number of upgrades for existing operator, which will again increase my revenue per tenancy. So by end of this year, more or less, it should be close to my original revenue per tenancy.

Sir, when we have already added close to 1,000-plus towers in last 1 year, there should be some addition in revenue per tenancy, right? But that's not currently showing in the numbers. [indiscernible]

We are also adding small cell tower, we have small cell and macro BSNL Vodafone [indiscernible] Vodafone was more or less small cell. Now since BSNL ratio, you see a percentage of BSNL just increasing this quarter. Last quarter, it was only 0.1%, 0.2% of revenue, which don't impact overall denominator. Now BSNL has increased [indiscernible] share has gone 5%, which is more or less from macro towers only. So this quarter, it has [indiscernible] By Q4, you will see revenue per tenancy going back to original by end of Q4.

But sir, the numbers which I have, we have added close to 2,000 new tenants in last 5 quarters, out of which only 211 small cell tenancies, right, against all our micro tower tenancies. So the number should have increased but is not visible, from 30,000 a month per tenant to 23,000 is a decrease [indiscernible]

[indiscernible] tenancy for Q4 was around 30,000. tenancy also gets because we also do a lot of site rental negotiation with the owner. Now as a trend, what we are doing is we are not giving any escalation to site owner. We are signing, initially, if you see there was a trend of giving 15% escalation every 3 years or 5 years. Now when we work very closely with the operator, we have stopped giving any escalation for next 10 years, which impact revenue per tenancy. But along with that, we are doing upgrade, which will offset that. But we'll need around 2 quarters to bring it to 32,000, 35,000 per tenancy. And even if you see my tenancy ratio has increased from 1.1 to 1.2, which obviously higher revenue per tenancy. [indiscernible] negotiations [indiscernible] operators are not willing to pay higher rental per site per tenant. So that offsets my revenue growth in terms of revenue per tenancy.

So sir, what will be the ballpark revenue per tenant number going forward? Will it be in the range of INR 25,000, INR 28,000 or it should go up...

It should be around INR 33,000 to INR 35,000 by March, and it should be around INR 33,000 to INR 35,000.

Sir, I'm talking about revenue per tenancy, not revenue per tower.

Revenue per tenancy should be somewhere close to INR 20,000.

Sorry. Current number is, I think, INR 26,000?

No, current number, you have to break it in a bracket. If you see my micro site, it will be INR 20,000. But when you average out, revenue per tower is close to INR 30,000. Revenue per tenancy would be close to INR 23,000, INR 24,000, which will achieve by March end. Right now should be somewhere INR 20,000, INR 21,000. By March end, we'll achieve INR 25,000 a figure for tenancy.

Okay, okay. And sir, when you are giving a target of close to 5,000 new BSNL rollout, this is over and above the existing order book, which we have from BSNL?

No, no. Since total number which rolled in Q3, which is over and above what I have already done. But the order book which delivered also. So that could be part of that 5,000 numbers.

So basically, there is not much change in the order book, correct?

Yes, not much change. 5,000 is not based on the industry size. It's based on the financial available with me. Industry size has increased. Now there will be around 35,000 towers, which we'll roll out in the next 2 quarters. But I can increase only based on my financials.

So basically, what we are targeting of 10,000 [indiscernible] and there is no change in that number [indiscernible] 10,000 remains 10,000?

Yes, yes. No change.

We take the next question from the line of Varun

The 600 sites which you have added during this quarter, so could you give a breakup of the -- was it majorly for BSNL or for other players also?

Majorly for BSNL but something for Vodafone also.

Okay. And the guidance which you have given 5,000 sites, so you have increased...

As of now, 5,000 spoken is only about BSNL. Vodafone will give guidance once we get clear picture from Vodafone by end of September or mid-October.

Okay. But you mentioned that you currently have around INR 200 crores of cash flow. So from that, and still you haven't raised the additional amount and we will reach Q3 soon. So because the 5,000 to 7,000 sites, you will need almost more than INR 500 crores, INR 500 crores, INR 600 crores.

INR 800 crores [indiscernible] So right now, we have INR 200 crores, INR 250 crores right now. BSNL just through yesterday. So now we have right now, BSNL office , [indiscernible] 10, 15, 20 days, we'll have a clear funding plan on paper post which we can share with you. But we'll do whatever it takes to roll out these sites. [indiscernible] to invest more funds, [indiscernible] already. He has assured us that whatever funding is required, it will come through but we need to roll out these sites. There's a clear mandate from managing director, we need to do minimum 5,000 sites and we need to go higher than that in this financial year. That's a clear management directive.

How much CapEx was spent in Q1?

Close to INR 10 crores, INR 50 crores. Around INR 36 crores, INR 35 crores to INR 40 crores.

And what was the receivables amount, if you could share?

What was the?

Receivables amount as of first quarter.

It's pending [indiscernible]

Receivables. INR 48 crores.

We'll take the next question from the line of

So my first question is that what has led to increase in EBITDA to 76%? Was it increase in tenancy or other factors has contributed to it?

[indiscernible] factor which has lead to improving tenancy. One is obviously our existing site. Second, we have done a lot of upgrade for Airtel and Jio. A lot of upgrade for Airtel and Jio, so that has improved my EBITDA.

Okay, okay. My other question is that can you update how much loan has been sanctioned and came in until June '25 for tower roll and how much funds have been utilized?