This PSU telecom equipment stock surges 30% in three days; here's why

Business Standard

2 days ago

Share price of ITI today: Share price of ITI rallied 8 per cent to ₹365.95 on the BSE in Thursday's intra-day trade amid heavy volumes in an otherwise subdued market. The stock of the public sector undertaking (PSU) company is trading higher for the third straight day, surging 30 per cent during the period.
At 01:16 PM, ITI was quoting 6 per cent higher at ₹360.50, as compared to a marginal 4 points gain in the BSE Sensex at 81,136. The average trading volumes on the counter more than doubled, with a combined 6.96 million equity shares, representing nearly 1 per cent of the total equity of ITI, having changed hands on the NSE and BSE. The stock had hit a 52-week high of ₹592.85 on January 7, 2025.
Allotment of equity shares to Government on preferential basis
ITI in exchange filing said that the board of directors of the company in its meeting held on May 27, 2025 approved allotment of equity shares on preferential basis to President of India against capital expenditure (Capex) received of ₹59 crore in pursuant to the Board for Industrial and Financial Reconstruction (BIFR) order dated January 8, 2013.
ITI's Q4 results
In January to March 2025 quarter (Q4FY25), ITI's consolidated loss before exceptional items and tax has reduced to ₹67.26 crore from ₹238.94 crore in the same quarter of the previous fiscal. Revenue from operations jumped 74 per cent to ₹1,045.70 crore from ₹601.28 crore in Q4FY24. In Q3FY25, the company had posted revenue of ₹1,034.54 crore and a loss before exceptional items and tax of ₹67.12 crore
Update on ASCON phase IV project worth ₹8,280 crore
ITI in Q4 results note said that the company has signed a contract dated October 1, 2020, with the Ministry of Defence for the execution of Army Static Switched Communication Network (ASCON) Phase IV project worth ₹8,280.36 crore. It includes installation, commissioning, and maintenance of telecom equipment, NMS, mobile nodes, and civil works for providing the complete infrastructure at various sites and roll-out of the optical fibre network.
The implementation of the project is to be completed in three years, and thereafter it must be maintained for ten years, including a two-year warranty. For Proof of Concept [PoC] activities, a test bed has been set up at the Army Headquarters 5 signal premises of the Indian Army. ITI and OEM teams are assisting the Army team in the PoC process. The PoC is in process and mainly delayed because of the Country-of-Origin Issue, which has been resolved now, and PoC is expected to be completed, the company said.
Established track record of executing critical projects
Incorporated in 1948, ITI was the first PSU established by the Government of India (Gol) post-independence. Over the last seven decades, the company has a track record of executing projects in the fields of telecommunications, defence, information technology, etc. Over these years, the company has successfully displayed its ability to execute some of the strategically important and mission-critical projects for the army, defence, Indian Space Research Organisation (ISRO), Gol's Make in India, Digital India, Army Static Switched Communication Network (ASCON), etc.
Outlook
The pick-up in the pace of execution and a strong outstanding order book of ₹15,964.8 crore at the end of December 2024, including some of the high-value and critical projects such as Bharat Net Phase-III, BSNL 4G roll out and ASCON, ensures a comfortable revenue visibility for the next two to three years.
India Ratings and Research (Ind-Ra) view on ITI
As a PSU under the Ministry of Communications, ITI plays a crucial role in the telecommunication and technology sectors, contributing to the government's vision of a 'Digital India' and 'Make in India'. ITI has been a key contractor for major government projects of BSNL, Mahanagar Telephone Nigam Limited (MTNL), Ministry of Defence, Ministry of Rural Development, etc., thereby making it a strategically important entity for the Gol.
ITI receives financial and non-financial support from the Gol on a consistent basis, which is likely to continue in the medium term. In addition to direct financial support, the availability of some of the projects on a preferential basis, support to obtain timely approvals for the company's various land monetisation efforts, and timely payments from other government-owned entities, which are ITI's customers, are some of the non-financial supports provided by the Gol to ITI. Ind-Ra believes this indirect support is critical for the entity to service its debt obligations in a timely manner until the standalone operations turnaround, the rating agency said in a rationale dated May 21, 2025.
The agency expects the profitability to recover from FY26 onwards, supported by higher revenue and new projects being entered at better margins as confirmed by the management. Any deviation from the same will remain key monitorable, Ind-Ra said.
About ITI
Incorporated in 1948, ITl is a PSU, offering a wide array of products and services to telecom service providers, the Ministry of Defence and other Gol agencies. ITI's product portfolio includes telecommunication equipment, electronic products, solar panels, smart energy meters and various other diversified products. The company's service portfolio includes cloud solutions, data centre hosting, electronic contract manufacturing and various manufacturing and testing services.