Tata Communications Ltd. share price target

Tata Communications (TCom) has agreed to acquire Kaleyra, a US-based omni- channel integrated CPaaS player for enterprise value of US$250mn (0.73x CY22 sales). This is likely to enhance TCom’s global position in CPaaS services (which is growing at 25% CAGR as per Juniper), and with The Switch acquisition, TCom’s position in the US may become stronger.

Tata Communications (TCom) has shared an upbeat revenue growth outlook for FY23 27E in its investor meet (on June 7, ’23). The company expects its data revenue to grow by 2x to Rs280bn by FY27 at a revenue CAGR of 18%. This will be driven by >35% growth in its digital services revenue during the same period, and its mix will rise to >50%.

Tata Communications’ (TCom) Q4FY23 data revenue grew 2.2% QoQ / 11.2% YoY sustaining double-digit growth. However, data EBITDA margin dipped 240bps QoQ to 24% due to higher employee cost.

Tata Communications’ (TCom) Q3FY23 data revenue grew 2.9% QoQ / 11.1% YoY. Company maintained good revenue growth momentum even in the seasonally weak quarter, which shows rising execution efforts.

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.