4 optical fiber stocks including Tejas Networks surge up to 12% ahead of BharatNet tender opening

Optical fiber stocks experienced a significant rally today. Tejas Networks surged 12.10% to ₹1,290 per share, marking its largest intraday gain since April 2024. Sterlite Tech also saw a notable increase of 9%, reaching ₹143.84, its biggest intraday jump in four months.

HFCL achieved its largest intraday gain since January 2024, climbing 11.52% to ₹134. Additionally, Birla Cable ended the session with a 6% gain, trading at ₹282.40 per share.

These companies are engaged in various critical areas of the telecommunications and data sectors. They manufacture optical fibers and design the fiber optic cables used for high-speed data transmission.

What triggered the rally?

The rally in optical fiber stocks was triggered by the upcoming opening of the mega tender for the next phase of the BharatNet project, scheduled for August 8, as per the recent media reports. 

Earlier this year, Bharat Broadband Network Limited (BBNL) issued a tender worth approximately ₹65,000 crore for the implementation of BharatNet's third phase. 

Companies such as HFCL, STL, TCS, and Tejas Networks have expressed interest in participating in this tender, either individually or through consortiums.

Tejas Networks, for instance, has previously provided advanced broadband access equipment for BharatNet's Phase-1 and Phase-2, as well as Indian Railways' public Wi-Fi projects. These deployments cover nearly 100,000 villages and over 4,000 railway stations.

The BharatNet project is one of the largest rural telecom initiatives globally, aimed at connecting all Gram Panchayats across India to provide universal broadband access. The goal is to facilitate access to services like e-health, e-education, and e-governance in rural and remote areas. So far, Phases 1 and 2 have successfully connected over 200,000-gram panchayats.

What is the BharatNet Phase III project?

The BharatNet Phase-III project features a three-tiered architecture that includes internet leased line bandwidth, middle-mile connectivity, and last-mile connectivity. The initiative focuses on engaging village-level entrepreneurs, or Udyamis, to provide last-mile connectivity to households on a revenue-sharing model. BSNL aims to establish 15 million home fiber connections over the next five years through the BharatNet Udyami model.

In August 2023, the Cabinet approved an outlay of ₹1,39,000 crore for BharatNet, the government of India’s project for last-mile connectivity across 6.4 lakh villages in the country. This outlay is significantly bigger than phase 1 and 2 combined funds of ₹42,070 crore.

BharatNet Phase 3 is expected to substantially increase the size of India's fibre roll-out services market. In addition to fibre roll-out prospects, optical fiber companies are also actively pursuing system integration opportunities arising from diverse government departments, public sector enterprises, and defence sectors.

The National Broadband Mission aims to fiberise 70% of India's base transceiver stations (BTS) by fiscal year 2025 to support efficient 5G services. As of October 2023, fiberisation stands at approximately 38%, indicating a significant need for additional fiber deployment across the country to meet this goal. The government plans to expand fiberisation to 5 million kilometers by FY25 and target the construction of 1.5 million new towers.

Stellar performance

Optical fiber stocks have delivered impressive returns, driven by consistent order wins for optical fiber cables and improved financial performance. This rally has been further bolstered by the Indian Commerce Ministry’s imposition of anti-dumping duties on imports of optical fibers and related goods from China, Indonesia, and Korea.

HFCL shares have surged 64% this year so far. It became the first Indian company to launch its indigenously designed 5G Fixed Wireless Access (FWA) Customer Premise Equipment (CPE) solution.

Tejas Networks’ shares have risen 50% in 2024. In March, the company signed agreements with Telecom Egypt, the Information Technology Industry Development Agency, and the National Telecom Institute to extend its expertise in implementing BharatNet and National Knowledge Network projects to Egypt.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.