MUMBAI: Shares of telecom equipment manufacturer ITI Ltd soared 20% on Monday, in heavy volumes, on reports that the government has barred state-owned telecom companies from using Chinese equipment for 4G upgradation.
At 0105 pm, the stock traded at ₹134.30, nearly 20% higher from previous close, while the benchmark Sensex was up 1.6% at 36,592.46.
The stock has rallied 30% in the last two days, and 45% since the beginning of the year. The Sensex, in contrast, has declined 11.3% since January.
Last week, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) had cancelled their 4G upgradation tenders issued in March.
The move followed the Department of Telecom's decision to issue a fresh tender which is likely to exclude Chinese companies from providing equipment for the upgradation process.
After a violent face-off between Chinese and Indian troops in Galwan Valley, Ladakh, last month, the DoT had asked BSNL and MTNL not to use Chinese equipment for upgradation of the 4G network.
Separately, ITI has partnered with Tech Mahindra to work in areas of 4G and 5G networks, smart cities and healthcare services.
"The partnership will not only help to reduce dependency on import of telecom equipment from foreign countries but also address the concerns in building a strategic network for Defense Communication. Through this partnership we commit ourselves to the Government’s initiative of Aatma Nirbhar Bharat," ITI Ltd's chairman and managing director RM Agarwal had said in a press statement while announcing the collaboration.
In April, the Defence Research and Development Organisation wanted ITI to manufacture portable ventilators and transferred technology to come up with a final product after due test procedures. As of December 2019, ITI had an order book worth about ₹20,000 crore.
The company reported a 47% drop in consolidated profit to ₹36.46 crore for the March quarter on account of covid-19 disrupting its supply chain.
ITI is a state-owned electronics product manufacturer under the DoT that produces radio modems, optical networks, smart metres, and Wi-Fi access points, with the defence sector contributing to a third or nearly 35% to its overall revenue.