Suyog Telematics Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Guidance intact but delayed: The INR320 crore revenue target and 10,000-tower ambition are reaffirmed, but the timeline has slipped by two quarters. Management now expects the revenue target "six months later" than FY25, with a massive rollout push beginning in Q2 FY26.
• BSNL is the new growth engine: A central office directive to transfer non-performing IP sites to Suyog, plus multiple project types underway, positions BSNL to contribute 5,000 tenancies this year. BSNL revenue share already improved to over 2% in Q4.
• Vodafone bet is explicit and large: Management is guiding for 4,000 tenancies from Vodafone and insists the operator will "come much stronger," citing 5G rollouts in Bombay and Delhi and an expected nationwide launch by August.
• Margins improved sharply, ESOP masked it: EBITDA margin ex-ESOP hit 71.4%, up 853 bps YoY, while a one-time INR27 crore ESOP charge compressed reported PAT. Management says the expenditure impact is done and margins of 32-35% are sustainable.
• What to watch next quarter: Whether the INR24 crore of recognized-but-unbilled revenue converts to cash, the pace of BSNL site transfers from non-performing IPs, and whether the promised Q2 rollout acceleration materializes now that INR100 crore of bank debt is in place.

The BSNL Inflection

• Preferred partner status formalized: A BSNL central office letter directed all circles to transfer sites of non-performing IP companies to Suyog, and the company was declared the best performing IP for BSNL. Management expects these transfers to begin converting in "next weeks/15 days."
• Three project types running simultaneously: Suyog is executing new anchor site rollouts for BSNL, relocating existing sites onto its towers, and taking over sites from underperforming IPs whose supply orders are being cancelled.
• Revenue recognition backlog is mostly BSNL: Of the INR24 crore recognized but not yet billed, INR19 crore is from BSNL due to a site on-air delay caused by a Tejas backhaul issue, now resolved. Billing will flow in subsequent quarters.
• BSNL tenancy target: Management is guiding for 5,000 tenancies from BSNL in FY26, making it the single largest contributor to the year's tenancy addition plan.
• EPC tender opens a new vertical: BSNL has issued a tender for 40-meter towers across India worth over INR3,000 crores for erection and five-year O&M. Suyog plans to participate by June end, with BSNL "insisting" the company go ahead. This would create an EPC contract vertical to generate immediate funds and boost top line.

Shivshankar Lature: "BSNL has become one of the key important customer for us. Recently there was a letter released by BSNL central office to all the circle offices stating please transfer all the sites of non-performing IP company to Suyog."

Vodafone: The High-Conviction, High-Risk Bet

• Management is all-in on Vodafone's survival: The company is guiding for 4,000 tenancies from Vodafone in FY26 and insists the operator will "do more and more business in coming years." Vodafone currently represents 27% of revenue and 28-30% of receivables.
• 5G rollout cited as proof of life: Vodafone launched 5G in Bombay last month and Delhi this month. Management stated, off the record, that a nationwide 5G rollout is expected by August in H1.
• Payment behavior is normal for now: Vodafone pays rent and GST immediately; IP fees come in 90 days. Management reports no current collection issues.
• The AGR waiver narrative: When pressed on Vodafone's public statements about survival difficulty, management framed them as strategic posturing tied to the AGR waiver case: "if they want an AGR waiver, they have to make many such statements."

Tushar Shah: "Vodafone has been very aggressive. They will surely do more and more business in coming years. And we don't have any doubt on the sustainability of Vodafone. They will make statements because they play some games with the government."

Tower Rollout & Tenancy Growth

• 10,000-tower target reaffirmed: Management is "sure of achieving" 10,000 towers in the next two financial years, planning 5,000 additions in FY26 and 5,000 in FY27. The current base is 5,700 towers with 7,000 tenancies.
• FY26 tenancy target: 5,000 tenancy additions this year, split roughly 5,000-6,000 from BSNL and 4,000 from Vodafone, taking total tenancies to 15,000 by FY26 end. Overall tenancy ratio should touch 1.5.
• Q4 was muted by funding delays: Only 50-70 towers were added in Q4 because the preferential issue was withdrawn at end-Q3 and bank debt materialized only in March. With INR100 crore now in hand, rollout is expected to accelerate from Q2.
• Quarterly phasing: Q1 FY26 will remain muted; Q2 begins aggressive rollout though impacted by monsoon; Q3 will be the highest; Q4 also strong. The full revenue potential of the 1,800 towers deployed in FY25 becomes visible in Q1 FY26.
• Per-site realization decline explained: Monthly realization per tower fell from INR36,000 to INR29,000 because of a large volume of upgrade and small-cell rollouts in Mumbai and metros. These sites earn INR4,000-5,000 per month but carry better EBITDA and PAT margins than macro sites. Management expects rental yield to recover to INR32,000-33,000 in FY26 as macro site mix improves.

Capital & Funding

• FY26 CapEx plan of INR400 crore: Funded by INR200 crore bank debt (INR100 crore already received from Axis and ICICI in March-April, another INR100 crore pipeline by June), INR150 crore internal accruals, and INR30 crore from ESOP proceeds. Split evenly between H1 and H2.
• Internal accrual math is contested: Management asserts INR150 crore can be generated from operations despite OCF running at INR80-90 crore, citing supplier credit and other items. When an analyst challenged the arithmetic, the explanation was not fully resolved on the call.
• No equity fundraise planned: Management will rely on bank debt, internal accruals, and promoter warrants for FY26. A fundraise is not planned; the company will "wait for market conditions."
• Promoter warrants still pending: Shivshankar Lature's warrant was fully paid on 31 March; Suchitra Lature's warrant is expected to be compiled in this financial year, bringing INR50 crore. Promoters are "100% ready to invest any amount," but another warrant issuance cannot happen until the current one converts.
• CapEx per tower: On average INR10 lakhs per tower, with the structure at 50% of cost, SMPS and battery bank at 40%, and miscellaneous at 10%. Towers are sourced from Odisha and Nashik; SMPS from Delta, VNT, Greenpool; batteries from Intellect, Amara Raja, with a shift underway from VRL to lithium.

Margins & Profitability

• EBITDA margin jumped 853 bps YoY: Excluding the INR27 crore ESOP charge, EBITDA margin reached 71.4% versus 62% last year, driven by operational efficiency and cost management.
• ESOP charge is one-time on the P&L: The INR27 crore notional loss arose from the difference between the exercise price of INR541.67 and fair value. The full expenditure impact was taken in Q4; only capital impact will appear in future periods.
• PAT margin guidance sustained: Management guided 32-35% PAT margin for FY26, asserting it is sustainable based on revenues from operations, with other income now negligible after a related-party loan was repaid.
• Material cost is stable, not rising: Despite an analyst citing a 53.9% YoY increase, management clarified material cost as a percentage of revenue actually declined from 10.49% to 10.11%. Quarter-to-quarter fluctuations reflect expenditure timing, not structural cost increases.
• Employee cost increase is structural: Beyond the ESOP charge, the rise reflects a change in director remuneration and hiring for the operations team as more sites come online.

Automation & Internal Controls

• Auditor emphasis of matter is about systems, not weakness: The recurring observation on internal controls stems from manual invoicing and sales processes, not actual control failures. Billing is governed by MSAs and cross-verified by operators; the company has only four customers and four to five suppliers.
• Automation is underway: Warehouse management software is already deployed. A network operating system for remote and SIM-based monitoring has begun rollout in Punjab and will cover all 5,700 towers within six months. Billing automation is being developed with two to three software vendors.
• Management acknowledges communication gaps: The company admitted a gap between investor perception and performance, pledging to rectify it "with immediate effect" so that from next quarter "there is no gap."

Tushar Shah: "We want to achieve what we have committed and what we have 10,000 additional towers. So our focus is actually clear in terms of whether it's top management or any employee of the company, focus is only and only on performance and we are confident that if I am able to achieve my guided numbers, market will surely react positively to my results."

Guidance & Commitments

Key Metrics