Result Update – Tata Communications

TCOM reported a weak quarter on the margins front.

• Topline came in at | 4569 crore, up 7.2% YoY & up 0.9% QoQ, driven by data revenues (forming ~80% of revenues), which was up ~11.2% YoY (up 2.2% QoQ) at | 3670 crore. Incubation services and Digital Platforms segment of data business grew ~65% and 16% YoY, respectively. Voice revenues were down 13.9% YoY (down 8.6% QoQ) at | 462 crore.
• Consolidated EBITDA at | 1034 crore, was down 1.1% YoY and down 4% QoQ. The consequent margin was at 22.6% (down 190 bps YoY and down 115 bps QoQ) owing to lower data EBITDA margin, which was at 24%, down 240 bps QoQ. We highlight that it is the lowest margin in the last 12 quarters despite revenue growth picking up.

Key triggers for future price performance

•  Growth will be driven by platforms viz. a) cloud, edge & security, b) next generation connectivity, c) NetFoundry, MOVE & IoT, wherein each have robust market size growth potential of 15-25% CAGR in next four to five years.
• We expect ~11.4% data segment revenue CAGR in FY23-25E and overall margins at 24.6% in FY25 vs. 24.2% in FY22, with margin weakness in FY24.

Read the full report here – https://www.communicationstoday.co.in/result-update-tata-communications-2/

ICICI Securities