Suyog Telematics Limited (537259) Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q2 and H1 FY '26 Post Earnings Conference Call of Suyog Telematics Limited. Today on the call from the management team, we have with us Mr. Shivshankar Lature, Managing Director; Mr. Tushar Shah, Business Head, India; Mr. Ajay Sharma, Chief Financial Officer; Mr. Suyash Lature, Business Development Manager; and Mr. Himanshu Agarwal, part of the finance team. As a disclaimer, I would like to inform all of 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 brief us about the business and performance highlights for the period ended September 2025, and the growth plan and vision for the coming post which we will open the floor for Q&A. Over to the management team.

Thank you, Vinay, for the introduction. Good morning, everyone. We will be presenting Investor -- key slides of investor presentation so that we can focus more on Q&A. So we'll only reflect the key critical 4, 5 slides of investor presentation on this one. I will start my presentation right now. So we are presenting for Q2 FY '26. And our revenue from Airtel 46.5%, Jio stands steady at 22.7%. Vi has increased to 26.3% and BSNL has increased to 4.5%. So again, like every quarter, Airtel has around 46%, 45% of my revenue share, followed by Vi and Jio, which is a very good sign for any company because top 2 customers are contributing to more than 16% of my total revenue. We have presence across India with 5,800 into plus towers and 7,100 plus tenancies. To be specific on numbers. We have ended quarter at 5,861 towers, with a total tenancies of 7,163. As for the earlier quarter, we have crossed 1,000 tenancies of government sites and 4,000 tenancies for small cell sites. We have increased now very strong fiber network to 6,152 kilometers, and we have 702 sites which are ready for integration majorly for government operator with few for private operators, which they end the process of integrating the sites. So as and when they integrate the sites, it will come as a part of my total tenancy in total towns. So directly now been coming to our what are our strategies for the growth of the company, which is a near-term goal. We have 500-plus macro sites for Vi, which are currently work in progress. So we already have loading of 500-plus sites from Vodafone across India and majorly all of them are macro sites. The major circle, which we are covering in this 500 sites are Mumbai, Maharashtra, West Bengal, Kolkata, Gujarat, Rajasthan are the major circles where we are deploying sites for Vodafone. Punjab, Haryana and Delhi. These are major circles where we're deploying sites for Vodafone as you know private operators don't give me loading on one shot. They keep give me loading on a daily basis. So this loading has just started after all the positive news which came from VIL last week. We have already crossed 500 numbers, and it's growing on a daily basis. So we are very confident we will be doing 1,000 plus sites for Vodafone up to March or even much higher than that based on the Vodafone rollout strategy. As informed earlier, we have aggressively bidded for BSNL sites, 12,500 sites out of 70,000 sites which BSNL has issued RFP for. Right now, BSNL is in a progress of negotiations where they're expecting some volume discounts or some business discounts from all the IP companies. We are expecting the entire BSNL process to get completed in next 30 to 45 days post which they will do allocation of the sites. And we are confident we'll get at least 6,000 sites from BSNL across India, and most of them would be a GPT sites which are more profitable for us in terms of BSNL rollout. They are right now negotiating with all the IP companies, who have bidded, there are more or less, zeroes on 4, 5 big companies with whom they are either in negotiation stage. And they are expecting discount, which we are working on to get the huge business volume of 6,000-plus sites. We have got -- we are on the final stages of getting 1,000-plus kilometers of fiber aerial, fiber tender in Mumbai circle from MTNL, it has again completed all the negotiations stage and it's in the final approval with CMD and the top management of BSNL. Again, which we're expecting in a month to 45 days' time, we'll also get allocation letter for MTNL 1,000-plus kilometer of aerial fiber. Now one of the biggest upside for this quarter is, Airtel has started deploying 5G rollout on our ULS site. So we have already started deployment of these 5G sites to Airtel. We are managing around 2,500 sites for Airtel ULS across India, on which Airtel has started giving us service order, it's in the process of deployment of 5G, which gives us immediate upside of INR 3,000 to INR 4,000 per site per month with a very minimal CapEx because they've already prepared our site for all the upgrades and additional tenancies. So this would drastically improve our EBITDA impact, and we are expecting the Airtel wants to complete -- enter this 2,500 site on 5G by this kind of financial year. We have already got 250-plus sites targets for month of November. So it's going very strong, and it's one of the biggest upside because with the minimum CapEx, you get an upside of INR 3,000, INR 4,000 per month per site, which gives you your realization per tower increased drastically and which will improve your ROI, and this will directly hit my EBITDA and PAT levels, which is one of the biggest upside for us in this quarter. We are also working with some data center company, where we are sharing [indiscernible] fiber for them in Mumbai circle majorly, which would be around INR 35 crores project, which we want to materialize -- which we want to start in this quarter and want to materialize by December, which is also on a good -- which is showing a good progress in terms of negotiation and which should get finalized anytime soon. As discussed, we want to be an entire -- we have a whole bucket of services for the telecom operator. We are going very strong on small cell, macro site and fiber rollout. We are also on a verge of discussing closing few inorganic growth. We are working with 2, 3 companies mainly of Delhi and Rajasthan circle, where we're in the final stages of negotiation. If everything goes as per our plan, we will be soon closing a good number of inorganic growth for Suyog. In terms of financials, our revenue for quarter -- consolidated revenue for quarter was INR 554 million. EBITDA stand tall as ever with INR 417 million, which is almost 75% of EBITDA. So we have sustained an EBITDA percentage of 75%. Even our net profit is INR 166 million. And again, we have sustained 30% net profit margin even in current quarter. So this is one of the slides, which we want to discuss in detail, whereby revenues from operations has grown year-on-year, 16%. And if you see H1 compared to H1, it has grown by 17%. So even when my Q2 is normally a flattish quarter for all the IP companies, all the telecom operator, we've still shown a growth in Q2 with 16% year-on-year comparison. As you know, Q2 is always a very highly rainy season for telecom industry, where people don't deploy much sites. Even if you see the CapEx done -- in the history of Airtel, Q2, they have done -- their depreciation number is higher than CapEx, when Jio has not done any CapEx. And Vodafone has done a very marginal CapEx. Even their CapEx has decreased by 28% in Q2 because Q2 is always a sluggish or slow quarter historically for all the telecom companies. Still, we have done a very decent performance in Q2. If you -- and my EBITDA margin again has increased by 201 bps, it stood strong at 75%. And even it is year-on-year, if you see H1 comparison to H1, then it has increased by 297 bps. My PAT margin is again strong at 30%, which has -- from 42%, it has gone up to 30%, mainly because of increasing interest cost and depreciation has increased for us. Now one of the key parameters, which I want to explain to you is the revenue per tenancy. If you see my revenue per tenancy has increased -- my March '25 exit, the tenancy was -- revenue per tenancy was INR 22,000-plus figure per tenancy revenue per month, which has gone up to INR 25,000 in current quarter, which is mainly on the basis of the major rollout, which we have -- major updates, which we've done for Bharti Airtel Limited. So which has given me INR 3,000 upside per tenancy on Airtel sites, only on the basis of upgrade, whereby my CapEx was very minimal. And if you compare year-on-year, last September '24, revenue per tenancy was around INR 30,000, which is now on INR 25,000. The major reason for drop in revenue per tenancy is mainly because we are doing a lot of products for BSNL site. And when we roll out BSNL site, that too specifically outside Mumbai, my site rental, which is complete pass-through to operator is lower. Like I pay around INR 15,000, INR 20,000 per site per month for a private operator, where my site rentals are very low in a tune of INR 8,000 to INR 10,000 for BSNL. So which will always decrease my revenue per tenancy, whether I do BSNL rollout, but it will improve my EBITDA and PAT, because my site rentals anyways pass-through to operator. I don't have any margin in site rental. My IP fee more or less remains same across India for private operator, but a marginal drop in IP fee in BSNL because they have IP fee category on A++, A+, B+, they will be very marginal. So overall whenever I do BSNL rollout, my revenue per tenancy will decrease, but my PAT and EBITDA will improve because that's a pass-through expenses, which we were decreasing. My IP fee still remain very steady and strong even for BSNL sites. So this is what I wanted to explain. And even if you see my other major impact, if you compare the overall revenue of the company, my other income has dropped compared to year-on-year because there was around 40 million Vodafone reversal in September '24. Right now, we don't have any reversals from Vodafone because payments are coming from Vodafone on a regular basis, which is one of the very positive and healthy sign for a company, where one of my private customer's delaying payment has now started paying on timely basis. Depreciation has also increased because we have renewed a lot of our license agreement for an existing site, and we are renewing for 10 years, where depreciation is normally higher in a lease rental in initial few years. That's why depreciation has gone up in this quarter. These are major key points which we wanted to highlight on financials. We can do the -- balance sheet, again, it remained very strong for us, we have a very strong balance sheet. And we are set to have a major rollout in coming quarters. We have almost freezed our plans. Funding, obviously, we have planned -- we have enough funding. We have raised some funds from -- initially, we wanted to do equity last year, but now we have taken a strategy where we are -- first, we are deploying -- first we are raising the debt from the banks, which is available through which we will do our major rollout. And then as and when required, we'll go for equity dilution. We are set for a major, major rollout in next few quarters. Everything is aligned. We are just waiting for final approvals from the BSNL. And we are very sure this will take our company to next level when we complete all our rollout plans. That's it from my side. Thank you, everyone. Now Vinay, we can open in for Q&A.

[Operator Instructions] We'll take the first question from [ Varun Geya ].

A couple of questions from my side. So firstly, I wanted to understand how will you execute these orders. BSNL, you are expecting 6,000 towers in the next 30, 40 days, which already got delayed, I guess, and wanted to understand the plans of the overall execution because I don't see debt increasing in the balance sheet. You mentioned that INR 100 crores to INR 150 crores, you'll raise borrowings and even the cash flows have gone down, because of some other loans and other current assets going up. So one is on the execution and basis that, how do you change the full year guidance for FY '26? You mentioned last time that INR 250 crores of revenues will be achieved. So are we on track for achieving that?

So Varun, let's -- so first, let me answer your question in sequence. For BSNL, yes, there is a delay in BSNL order, but we all know that BSNL government companies have their own processes, which they need to follow. But we had a couple of meetings with CMD in -- before Diwali and post Diwali also, and we are very confident that it will go through. There's a little bit delay of 1 and 1.5 months. We are expecting -- the orders which we are expecting in month of October is getting delayed and maybe we will receive it any time in December. But we are very confident that's going through. In terms of how will we execute 6,000 sites, we'll need around INR 60 crores for 6,000 sites - INR 600 crore CapEx for 6,000 sites. Right now, we have aligned with banks where we have got this sanction limit approved for INR 150 crores. So we may have not utilized the funds completely. That's why it's not showing in our book, but we have got sanctions approved from banks for INR 150 crores. We have funds, which have been flown, which we at October, we have received funds from promoter for the conversion of the allocations...

That amount? So what was that amount?

INR 22 crores we have received in the month of October from the promoter, INR 22 crores. And we have internal accruals. So we have enough funds to roll out, 3,000 sites, which will take another -- which we are expecting should be completed by Q1 of next month, next financial year. So the INR 300 crores is almost aligned between internal accruals, bank debt and the promoter funds for the warrant, which we already issued. And then based on the other rollout of Vodafone and Airtel, we will decide whether we have to go for a fully dilution or not. But as of now, with all the funds, we can easily deploy 3,000 sites for BSNL.

So this will start from Q1 next year. But next 2 quarters, I see hardly any towers being added in this quarter also. So will this run rate continue?

No. So Q4, it will start -- more or less, see once we get the approval in December, we have to start from January itself immediately. Once they issued the order, they will be behind my life to deploy ASAP. So we are expecting our deployment to start from -- for BSNL I'm talking, BSNL requirement to start from Q4 of this financial year. Vodafone has already started deployment. Vodafone, we have already got 500 sites, which they were to complete before December. We're also doing a massive rollout of 5G for Airtel. See, which is one of the biggest upside, where we don't need this much CapEx, and we can get an upside of INR 3,000, INR 4,000 per tower. So which has already started. We have got target of 200-plus sites for month of November itself from Airtel. So Airtel and Vodafone deployment has started effective from November. BSNL rollout should start effectively from Jan.

Okay. And what are these other loans and increase in other current asset, if you could explain which is impacting the cash flows?

[Foreign Language] please?

[Foreign Language] in balance sheet. If you see the cash flow statement, it has increased. So these loans are giving -- this INR 6 crores was given to a subsidiary, IT company. So that has increased to INR 35 crores. So I wanted to understand what is that loans?

[Foreign Language]

Varun, what we are doing, since we are very confident of going through the BSNL tender, we are preparing our site very well, once so that whenever we receive the order, we can immediately RF to site and we can start booking our revenue. So we're saying advances to suppliers mainly and some vendors to keep our material ready. And as and when we receive the order, we'll start deploying it. So faster the revenue realization will be there.

Okay. And one more question on the EPC order you are expecting. So that was separate, right?

Right. So EPC, again, BSNL is in the process of finalizing the EPC tender. We have already bidded for 2,000-plus sites for EPC. Tender is not yet opened by BSNL. So as and when it gets opened, we'll update you on the EPC tender also.

Okay. And your full year guidance would remain same?

It will remain same as of now, yes.

We'll take the next question from [ Rajesh ].

Back in Q1, we had guided we will add about 5,000 tenancies by end of the year. We were at 7,000 at Q4. We plan to go to 12,000 by end of Q4 FY '26. How are we -- I mean, over Q1 and Q2, there has not been much progress in terms of tenancies. How -- like do we still -- are we still sure and confident that we will hit 12,000 by end Q4 or we plan to spill it into FY '27?

So it will get spilled over in FY '27 because we were expecting an order of BSNL to go through by October, which seems now get ended by December. So we see year-end something around 8,500, 9,000 sites by March and balance will get spilled over to next financial year, which more or less should happen by Q1 or Q2 of next financial year.

So 9,000...

Orders are still there. We are confirmed of rolling out 12,500 right. Only instead of completing it in Q4, we would -- it will get spillover to a couple of quarters in next financial year.

So basically, it would be 9,000 by end of Q4 and...

That's what -- that's what the projects are [Foreign Language] the way Vodafone is rolling out. I mean if it goes as per plan, then we should reach 9,000. So we are also waiting for Vodafone final confirmation. But as of now, it feels that 8,500, 9,000 should be achievable by end of the year.

Okay. And we will start billing clients for at least for this 8,500 to 9,000 by end of year?

We'll start -- see whenever there's a private operator, bidding start immediately without any delay. Bidding really only happens when there is a site of BSNL where they take 3 to 4 months time to integrate the site.

Understood, sir. And in terms of revenue and EBITDA guidance, like with the change in the number of tenancies and pushing by BSNL by a few quarters per se, what -- how would the revenue guidance look like for FY '26?

As of now we are not changing the revenue guidance because we're also working on some inorganic growth. If we are able to close the inorganic growth as per our plans, then we should be able to achieve our revenue guidance. So that tenancy will also ensure the tenancy number, but only instead of only based on organic growth, we'll add a few thousands of sites from inorganic growth.

So it will be, let's say, 8,500 to 9,000 plus the inorganic growth in term...

That's what we are targeting right now.

And would the EBITDA guidance also remain similar with organic growth?

Right.

We'll take the next question from the line of [indiscernible].

So I wanted to understand on the order book from Vi site. So are we -- have we received order for 500 sites or 1,000 sites?

Right now, we already have over 500 sites from Vodafone in the last 7 days itself. See, once you know all the positive results which has happened with Vi in the last 10 to 15 days, post which they have increased their rollout. Even if you see overall Vi, they have decreased their CapEx by 28% in Q2. But now post all the developments which has happened from Supreme Court and government side, which has shown a very positive result of Vi rollout. They have increased their rollout drastically. In the last 7 days, they have 500 sites and it's increasing on a daily basis. So if you ask me how many sites we should be able to achieve for VI in 2 quarters, which is Q3 and Q4, we should be able to achieve 1,000 sites in Q3 and Q4 for Vi, minimum.

1,000 additional sites, correct?

You're right. Including this 500. Including this 500, which I have shown in the presentation.

Okay. And in terms of BSNL order, just wanted to confirm, you said that RFP is open for 7,500 sites, and we are planning to get order for 6,000 sites, correct?

Right. Out of 17,000 sites -- out of 17,000, there was an RFP for 21,000 sites. Out of which they were targeting to roll out 17,000-plus sites. We have given a bid for 12,500 sites. Out of which we are very sure 6,000 sites will be allocated to us. It can be more than that. But see, even as a company, we don't want to go overboard on BSNL where we want to keep a revenue from every operator, say, 30%, 35%. We don't want any one operator to dominate our revenue side. So we are targeting right now 6,000 sites, which will shoot our balance sheet also, and we are very confident that's a minimum number of sites, which BSNL will allocate to us. So we are planning BSNL rollout very strategically. We are going only for GBT sites instead of RTP sites. We are going in a circle where we are very strong right now. And it should also -- we also simultaneously ensuring that Airtel is around 35% or 40% of my revenue. Jio will continue to be 25% of my revenue. So that it's balanced, and we have a very strong revenue inflow from all the 4 operators.

And sir, our cash flow statement says we have done a CapEx of close to INR 97 crores, but our total site tower addition is just 150 sites. So this number is not matching. Can you please help us understand?

You have missed one box of my site where there are 702 sites which are ready for integration, which we have deployed mainly for government operator BSNL. It will get added to tenancy as and when they integrate the site. So if you see 702 sites I mentioned as ready for integration. Where I have done all my CapEx in H1 site is completely ready. On BSNL needs to come, install their equipment and integrate the site. So as I said earlier, I can take into tenancy because BSNL takes around 3 to 4 months time to integrate the site. That's where that box came into picture. So we have -- if you see CapEx we've done for 900-plus sites, out of which 150 sites are converted and integrated and it's part of my tenancy, 700 sites is ready, it will get converted to tenancy as and when BSNL integrates the site.

So in how much -- in how many months are we expecting that we can start generating revenue from this site?

So recently, when we spoke with BSNL about the material, TCS has committed them to deliver all the material by end of Q3. And that's why we are very positive that my new rollout for BSNL will also start from Q4 and this integration also will complete in Q4. So logically, we should get revenue of that site starting from Q4, not on first day of Q4, but it will happen sequentially on a daily basis from Q4.

Understood. And sir, can you please help me understand the revenue per tenancy? So you mentioned that Airtel 5G rollout has started in this quarter. And -- but you are also saying that the increase in tenancy -- revenue per tenancy due to Airtel rollout, 5G rollout. So the numbers are not matching here. And second point was you also mentioned that the BSNL rollout is outside Bombay where our rental revenue is lower. But BSNL is just 4% of revenue. Then what is the reason our revenue tenancy increased from INR 25,000 -- INR 27,000 a month to INR 22,000 a month.

So first thing you have to compare 3 numbers when you see revenue per tenancy. One number is September '24, which was around INR 29,000, INR 30,000, last '25 which was around INR 22,000, September '25, which is around INR 25,000. So there was a drop majorly in Q3 and Q4 where we rollout 1,800 sites for BSNL. See revenue is only 4%, but number of sites, if you see we have done 1,800-plus sites for BSNL, whereby site rentals are much lower. Like when I pay to any operator -- for private operator, I pay INR 15,000, INR 20,000 per month to a site owner, which gets passed through to mobile operator. In BSNL case, since it's a government company, we are able to have a better negotiation power and we pay around INR 7,000, INR 8,000 or maximum INR 10,000 for BSNL and tenancy sites. And second, most of my BSNL site has come outside Bombay, where rentals are much lower for BSNL. And that's why my revenue per site gets hit. Second, now why it has gone from INR 22,000 to INR 25,000. We have done 2 major things. One is extend upgrade, which has given me upside around INR 2,000 per site, INR 2,000 to INR 3,000 per site. And we have also purchased -- in March '25, we have done -- we have purchased Lotus Tele Infra. Now this INR 25,000 is with the console number. And since all these sites of Lotus Infra is in Delhi circle where rentals are high, it has also given me a few hundred of around 700, 800 upside per site basis. So INR 22,000 to INR 25,000...

But sir, contribution for -- like you said in September, it was INR 30,000, which has decreased to 23,000, but BSNL per contribution [Foreign Language].

[Foreign Language] just company, 1,800 sites into INR 10,000 per month or at least INR 7,000 to INR 8,000 rental per month goes down. So INR 10,000 into INR 8,000, if you do, it's also a huge number. And when you convert even 4% BSNL will impact you majorly. [Foreign Language] But again, obviously, because of loading charges, it will improve going forward.

[Foreign Language]

No, no. So there are 2 scene in rental agreement. [Foreign Language] But you can see my previous presentations or my previous transcript of the recordings. We have been doing Airtel upgrade on battery bank and FDD and TDD for past 2 or 3 quarters now. [Foreign Language] There are 2 different upgrades, which is happening. Airtel has done FDD, TDD and battery bank upgrade in the last 2 quarters for almost by 50%, 60% of sites. And now they are doing 5G upgrade on all the ULS sites.

Okay. And so going forward, we expect the revenue per tenancy to be stable at INR 25,000, INR 26,000 a month or it should go back to INR 29,000, INR 30,000 a month?

It will not go back to INR 29,000, INR 30,000 per month because along with Airtel 5G upgrades, we also doing BSNL rollout from Q4 onwards. So it should be stable between INR 25,000 to INR 27,000.

But again, that would be in outside Bombay, where our rental will be low, right?

Right. So that's why I'm not taking it back to INR 29,000, INR 30,000, I'm keeping stable because we are doing 2,500 upgrade for Bharti Airtel, which will give me upside of around INR 4,000 per site. I'm increasing my revenue per site only INR 2,000 because INR 2,000 will get offset by BSNL rollout.

Okay. So we can expect INR 26,000, INR 27,000, not more than that, correct?

Not more than that. INR 27,000. It should be stable between INR 25,000, INR 27,000.

And everything will come from Q1 onwards because in the next 2 quarters, we are focusing more on addition.

So Airtel upgrades has started happening from current quarter. BSNL rollout will happen from Q4 onwards.

Okay. And you also said that you have INR 150 crores of sanction -- bank sanction, but we have already received INR 96 crores of loan from the bank, right? So how are we planning to fund the further CapEx?

[Foreign Language]

So that is the additional sanction we are talking about.

Yes, additional sanction.

Additional sanction, for which we have not taken disbursement as of now, which will start taking as and when required.

So if -- let's assume we take this entire loan of INR 150 crores, then our debt will increase to INR 250 crores, correct?

Right.

[Foreign Language]

And interest cost [Foreign Language], sir?

Interest cost is 9 months.

We'll take the next question from the line of [ Vansh Solanki ].

Sir, I want to know about...

I'm not able to understand a single word what you're talking. Can you -- your voice is not clear, actually.

So I want to ask about the INR 35 crore projects which you have just mentioned, like what is the project, I didn't understand and what is time line for that?

I think you have to repeat. I was not able to understand what you are saying. Your voice is not...

I think he's asking about the INR 35 crore project, which we had mentioned in our goals. So he's trying to understand the time line for that.

Okay. So what -- first, let me explain what is that project. We are working with few -- as you know, data center business is growing in India in a big way. So there are a few data center companies which are trying to set up the data center across Mumbai, various parts of Mumbai, where they need a fiber connectivity. Every data center will need a fiber connectivity. So we are trying to provide fiber to data center as a onetime activity, which is on the final stages, we should be able to close our agreements with data center company by end of November or mid of December, and we should be able to execute that orders partially in this quarter and balance in next quarter.

So the 35,000 revenue -- INR 35 crore revenue, which you have told will be accrued till financial year '26 end. Am I right?

Right. That's what we are targeting right now.

Okay. And another question on Vi, Vi the 500 tenant towers is already deploying started, right?