Tata Communications Ltd. share price target

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....

Consolidated EBITDA margin was at 26.7% (up 36 bps YoY, 263 bps QoQ) aided by one-off | 50 crore for timing difference led employee cost benefit and reversal of provisions. PAT of | 425 crore was up 10.6% YoY and 43.7%...

Adjusted EBITDA, after an INR500m one-off gain in 2QFY22, rose 8% QoQ (2% above our estimate) on healthy cost optimization, despite slower revenue growth of 1.7% QoQ, which is slowly recovering. We expect low revenue growth visibility given the low growth outlook in Connectivity (71% of revenue mix). This, coupled with weak EBITDA margin guidance of 23-25% v/s 26.7% at present, suggests double-digit growth could be challenging. However, we expect an improvement in margin from the curtailing of loses in the Incubation business, building in...

Tata Communication (TCom) in its investor day revisited (and revised some of) its strategic growth path. The core growth path remained same with steps like deeper engagement with key clients (along with dedicated team for remaining clients), revamped operating structure, transformation from product to platform and Focus on Fixed + Usage model for digital platforms. On the medium term financial targets, there were few upgrades with a) RoCE target of 25-30% (vs. 20% target earlier), b) EBITDA margin of 23-25% (earlier guidance: 22-25%), c) maintaining optimal debt (vs. debt reduction...

Ambitious targets, but needs to tread carefully TCOM's analyst webinar provided a detailed deep-dive into the global enterprise growth opportunity, management's growth focus, margin outlook,...

Data growth segment revenues came in at | 774 crore, down 9.6% YoY, 3.9% QoQ. The company attributed the decline to slower deal conversion in the wake of business uncertainties due to Covid and tapering down of UCC traffic after the bump-up last year. However, the company indicated that demand outlook is robust in the medium/long term and the funnel has improved by 4% YoY in FY21 with large deal sale funnel up by 12%. It maintained the long term trend of double digit growth outlook in data business. Another positive change is that the company is looking to increase...

Tata Communications (TCOM)'s 4QFY21 revenue/EBITDA missed our estimates by 5%/8% on lower-than-expected revenues in both the Data and Voice segments due to slower deal to revenue conversion cycles. We have marginally revised down our revenue/EBITDA estimates for...

Tata Communication Q3FY21 revenues were weak sequentially largely due to seasonality and COVID related weakness in deal conversion impacting data revenues growth. Topline came in at | 4223 crore, flattish YoY & down 4% QoQ with data revenues (forming ~84% of the revenues) up 3.8% YoY (down 2.6% QoQ). Consolidated EBITDA came in at | 1046 crore, up 37.5% YoY with margin at 24.8% (up 678 bps YoY) but down 153 bps QoQ as Q2FY21 one-off gain of | 43 crore and there was also an impact of | 31 crore, due to timing difference of revenue & cost recognition in Voice...

Tata Communications (TCOM)'s 3QFY21 revenue/EBITDA was a miss due to lower-than-expected earnings reported in both the Data and Voice segments due to seasonality and slower deal conversions. However, excluding a one-time cost benefit from 2QFY21, the EBITDA miss stands at 5.9% (v/s 9.5% on total EBITDA). We reduce our revenue/EBITDA estimates for FY21 by 3%/4% and for FY22...