Tata Communications Ltd. share price target

Tata Communications’ (TCom) Q2FY23 data revenue grew 4.6% QoQ / 11.2% YoY and
showed significant acceleration though lower net revenue growth took away some lustre.

Tata Communications (TCom) organised its annual investor day on 14th June 2022 where it shared certain lead indictors that helped appreciate the company’s efforts to drive revenue growth, which was constrained by externalities particularly supply of equipment.

Growth to be driven by platforms viz. a) cloud, edge, security b) next generation connectivity c) NetFoundry d) MOVE & IoT wherein each having robust market size growth potential of 15-25% CAGR in next four to five years We expect ~10.3% revenue CAGR in FY22-24E in the overall data segment, driven by likely acceleration in growth from FY23 onwards. We expect overall margins to be stable at 25.5% in FY24 vs. 25.3% in FY22, with some...

Consolidated EBITDA was at | 1082 crore, up 3.5% YoY and down 2.7% QoQ. The consequent margin was at 25.9% (up 109 bps YoY, 20 bps QoQ on adjusted basis). Data EBITDA margin was at 32.2%, down 80 bps QoQ (up 40 bps on adjusted basis) and flattish YoY. PAT was at | 395 crore, up 28% YoY. Net debt at | 7,189 crore, was down by | 572 crore QoQ and...

We expect 10% revenue CAGR over FY22-24E as Connectivity (~70% revenue mix) has a low growth outlook. We factor in an improvement in margin on a favorable Data mix, curbing of losses in the Incubation business, and 15% EBITDA CAGR. We maintain our Neutral rating....