Suyog Telematics Ltd Q2 FY2025 Concall Summary

Key Takeaways

• 16.9% YoY revenue growth, margin expansion intact: Revenue hit ₹47.7 crore while EBITDA margin held at 73.2% and PAT margin at 42.5%, both up YoY. Management says 70–75% EBITDA and ~35% PAT are sustainable even as CapEx scales.
• The tower engine is accelerating: 80 towers added in Q2, 100+ in H1, with an order book of 652 sites. The company is targeting 5,000 tenancies in FY25 and again in FY26, reaching 15,000 by FY26-end.
• BSNL is a FY26 story, not yet a revenue driver: Rollout began only in September/October, so the benefit of being the largest IP-model partner to BSNL will show up next year. Management declined to quantify the exact revenue contribution.
• A ₹350 crore preferential issue funds the next leg: ₹250 crore from investors plus ₹100 crore in promoter warrants, to be fully deployed into CapEx by March. The company will then layer on debt in FY26 for a ₹400–450 crore CapEx plan.
• What to watch next quarter: Whether the promised acquisition closes by quarter-end, the pace of H2 tenancy additions against the 4,500 target, and any early signs of BSNL revenue beginning to flow.

Tower Rollout & Tenancy Growth

• H1 tower additions on track: 80 towers added in Q2 (60 macro, 20 small cell), bringing H1 additions past 100. The company expects to reach around 9,000 towers by March.
• Order book provides visibility: 652 sites at order level in Q2, with 3,000+ towers from Vodafone and 2,500+ from BSNL in the pipeline. Management plans to add 4,500 tenancies in H2 and is "99% sure" of hitting the full-year 5,000 tenancy target.
• Small cell tenancy ratio set to improve: Small cells currently carry a 1.1 tenancy ratio versus 1.8 for macro towers, because small cells arrived only after the 5G launch and Vodafone started rolling out just a few months back. With Vodafone now aggressive on small cells, management expects a sharp increase as all four customers deploy.
• Vodafone Idea turning aggressive: VIL reduced losses by about ₹1,100 crore last quarter, ordered 50,000 small cell and full-size units from Nokia Siemens for 4G and 5G, and has become very aggressive in rollout across most sectors. Improved payments from VIL contributed to the profit increase.
• Operations improvements driving repeat orders: An in-house team for tower and fibre maintenance improved uptime, while automation of warehouse management, vendor management, and a new network operating system for centralized site monitoring are all complete.

Shivshankar Lature: "And I assure all the investor that whatever guidelines we have shared or committed, we'll 100% achieve it in next two years."

BSNL: The Delayed but Large Opportunity

• Rollout timing explains flat revenue: BSNL revenue has not yet increased because actual rollout started only from September/October. Management expects a "drastic change" in BSNL's revenue contribution in FY26.
• Largest IP-model partner to BSNL: The company claims to be the fastest and biggest company delivering sites on the IP model to BSNL, including in Mumbai and other circles. It is targeting 2,500–3,000 BSNL towers in FY25 and the same in FY26.
• BSNL tower monetization is a separate, early-stage idea: Management clarified that BSNL's monetization plan involves land, buildings and fibre assets, not towers. Suyog is not a participant in BSNL towers but is exploring the idea of marketing BSNL towers to bring tenancy, though this is at a very initial stage.
• MTNL sites ready, billing pending: 450 MTNL sites are deployed and ready; billing will start when MTNL integrates them.

Fibre: The Next Infrastructure Bet

• The opportunity is measured in lakhs of kilometres: Every tower needs ~500–700 metres of last-mile fibre. With ~2–2.5 lakh existing towers plus ~2 lakh upcoming towers needing fiberization, the total addressable market is roughly 3–4 lakh towers multiplied by 500 metres each. Overall industry fibre demand could be 15–20 lakh kilometres in the next 2–4 years.
• IP-1 model, not EPC: The company will source optical fibre cable from manufacturers, then lay and maintain it on an IP-1 licence, generating monthly recurring revenue by subleasing dark fibre to multiple mobile operators. The fibre asset sits on Suyog's books.
• Margins expected to match the tower business: Management declined to disclose CapEx per kilometre or revenue per tenant per month, but stated fibre margins will be the same as the tower business.
• Revenue is a 3–4 year story: Management has consistently maintained that revenue from fibre and FTTH will grow only down the line in 3–4 years, not in the immediate two years. The company is targeting 5 lakh home passes in 3–4 years and expects 15% of revenue from fibre and FTTH in 4–5 years.
• No export ambition: The company is not looking at fibre opportunities outside India.

Shivshankar Lature: "Sir, fibre optical is the essential infrastructure in telecom. As good as tower, fibre, who told, sir, lot of order has Phonics and these all people have got. Even in UGO, 2 lakh kilometre BSNL has layed the fibre, 48. All the factories are full of orders. Nothing is less."

Inorganic Growth: Acquisition-Led Expansion

• Strategic, not opportunistic: Management has defined specific acquisition criteria: target companies must have Airtel and Jio as tenants, so Suyog can bring additional tenancy from Vodafone and Airtel, and/or operate in circles where Suyog is not strong, such as Delhi. The goal is to acquire companies where tenancy can be grown, not stagnant assets.
• Advanced negotiations underway: The company is in advanced stages of negotiation with multiple identified companies and expects to complete an acquisition by next quarter-end. Management declined to disclose target quantities, circles, or deal value, citing the sensitive stage of discussions.
• Funding split favours organic growth: A substantial portion of the ₹350 crore preferential issue will go to organic CapEx; whatever is possible on the inorganic front will be done within the remainder. The impact of any acquisition will be seen in FY26, with a shorter impact in H2.
• Margin protection promised: Management stated that any acquisition will not impact current EBITDA and PAT ratios.

Tushar Shah: "It is a tangible company, where I can bring a tenant as a tenant over there. So that my tenancy, I can grow on that company rather than having a stable company or stagnant company."

Financial Position & Capital Allocation

• ₹350 crore preferential issue in motion: The issue comprises ₹250 crore from an investor and ₹100 crore in promoter warrants, with the process expected to complete by December. The entire amount will go into CapEx and be utilized by March.
• CapEx trajectory is steep: The company will do another ₹400+ crore of CapEx by March, and plans ₹400–450 crore for FY26. The ₹350 crore alone can fund roughly 3,000 towers, while the company is eyeing 4,000+ individual towers.
• Debt to follow in FY26: The current preferential amount is not sufficient for the total CapEx requirement of ₹800–1,000 crore. Management will go for additional debt in the next financial year, funded through a mix of internal accruals and borrowing from multiple financial institutions, which it says will not be "very high debt."
• Trade receivables explained: Elevated receivables stem from two factors: electricity trade receivables follow a normal 3-month cycle and are included in trade receivables though not part of the top line, inflating days; and Vodafone now pays after 90 days instead of monthly in advance.
• Electricity is a pass-through sub-service: Electricity is provided as a sub-service to Vodafone, Jio, Airtel and BSNL. Reimbursement cannot be claimed in the GST bill, so a debit note is used; only the interest portion is reimbursed and expensed against each other.

Cost Efficiency & Technology Initiatives

• Battery shift underway: The company has started replacing VRLA batteries with lithium batteries for better life and cost efficiency. Zinc battery trials are planned for Q4, with demos already completed in the office.
• Energy cost reduction as a competitive edge: The company is working on windmill and solar solutions to reduce electricity bills. Management says that if it can reduce electricity costs substantially, it will gain an edge over competitors and improve cash flow.
• R&D pipeline includes satellite: The company is in advanced-stage discussions with satellite companies for last-mile connectivity trials, and is also working on FTTH last-mile delivery without laying fibre cable.
• Automation largely complete: Warehouse management and vendor management systems are automated; billing system automation is in progress. A network operating system now monitors all sites from the Bombay office.

Guidance & Commitments

Key Metrics