Tata Communications Ltd. share price target

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...

Tata Communication reported a better-than-expected performance on the operating front led by superior revenues and margins in the data segment. The topline was at | 4403 crore, up 5.6% YoY, 0.1% QoQ, led by superior data revenues (forming ~82% of revenues) that grew 9.9% YoY. EBITDA came in at | 1042 crore, up 26.2% YoY, with margins at 23.7% (up 385 bps YoY) driven by strong data margins of 27.1% (up 450 bps YoY), aided by structural cost efficiency (likely to remain) of ~| 100 crore (including moving of employee base in India) and Covid-19 led benefits (savings in travel costs,...

Growth segment Revenue grew 8% to INR9.2b, led by new deals while EBITDA jumped 16% to INR1.2b. TCOMs order book is equally growing in India/international markets and stake in the data center partnership important and has no immediate plans to monetize the land parcel. Voice segment revenue was flat QoQ at INR8b while EBITDA grew 46% QoQ to Payments solution segment revenue was down 37% QoQ to INR520m and EBITDA loss stood at INR40m (v/s profit of INR220m in 4QFY20), affected by the lockdown as average transactions declined to 56 in 1QFY21 (v/s 84 in 4QFY20). Despite some impact of COVID-19 on deal conversions, TCOM witnessed healthy addition in its order book, which is equally growing in India/international markets and across business verticals. It saw marginal QoQ revenue growth due to one-time gain in 4QFY20 and benefit of increase in traffic from customers, which was offset by lower revenue from other part of the Increased bandwidth usage led growth in this business.

Data business continued to witness healthy traction with strong margin turnaround in growth and stable trajectory in traditional services driving the profitability. The company witnessed strong 9.8% YoY, 9.1% QoQ revenue uptick in the growth segment driven by a surge in conferencing traffic. Margins expanded 510 bps QoQ to 11.6%, recording double digit margin for the first time. They also guided for double digit growth in data revenue and EBITDA growth in the medium term and would be sharing their strategic outlook later this month. We conservatively bake in 7.3% revenue CAGR...

15 June 2020 Data EBITDA growth at 15% QoQ was the strongest (without any one-offs) in the last 15-16 quarters, supporting 15% consol. But the traditional segment (contributing 60%/99% to revenue/EBITDA) saw flattish EBITDA, despite robust 24% QoQ traffic growth. Yet, new-age businesses (Growth and Innovation) benefited from the lockdown, contributing 60% of EBITDA growth. We increase our FY21/FY22E EBITDA estimates by 9% given the (a) better- than-expected EBITDA, (b) steady traditional business, and (c) managements confidence on improving trajectory in the new age business segments. Consolidated revenues were up 4% QoQ to INR44b (in line with est.) with voice segment revenue at INR8b (down 1% QoQ) and data segment revenue at INR36b (up 5% QoQ). On back of the COVID-19 crisis, there has been significant uptick in Internet traffic (+24% QoQ) and conferencing revenue (+20% QoQ), resulting from quick deployment of global work-from-home (WFH) measures and solutions. Consolidated EBITDA jumped 14.2% QoQ to INR8.7b (5% above est.); EBITDA margin expanded 180bp QoQ to reach 19.2%.