Result Update – Tata Communications

TCom reported a weak quarter on the margins front.

• Topline came in at | 4528 crore, up 8.2% YoY, 2.2% QoQ, driven by data revenues (forming ~79% of revenues), which were up ~11.1% YoY (up 2.9% QoQ) at | 3593 crore. Voice segment continued to remain weak with revenues down 8.7% YoY (down 3.6% QoQ) at | 506 crore
• Consolidated EBITDA came in at | 1077 crore, down 0.5% YoY, 4.6% QoQ. Consequent margin was at 23.8% (down 207 bps YoY, 170 bps QoQ), owing to lower data EBITDA margin, which was at 26.4%, down 246 bps QoQ. PBT was down 9.4% YoY, given the muted operating performance and higher interest expenses

Key triggers for future price performance

• Growth will be driven by platforms viz. a) cloud, edge & security, b) next generation connectivity, c) NetFoundry, MOVE and IoT, wherein each have robust market size growth potential of 15-25% CAGR in next four to five years
• We expect ~10.6% revenue CAGR in FY22-25E in the overall data segment and overall margins at 25% in FY25 vs. 25.3% in FY22, with margin weakness likely over the next few quarters. Strong cash flows generation to aid deleveraging

For report, https://www.icicidirect.com/mailimages/IDirect_TataCom_Q3FY23.pdf

CT Bureau