Tata Communications Ltd., incorporated in the year 1986, is a Mid Cap company (having a market cap of Rs 42618.90 Crore) operating in Telecommunications sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 4116.14 Crore, down -.36 % from last quarter Total Income of Rs 4130.95 Crore and down -6.83 % from last year same quarter Total Income of Rs 4417.68 Crore. Company reported net profit after tax of Rs 297.78 Crore in latest quarter.
Investment Rationale
TCOM has been navigating well in the last few quarters despite weak revenue growth. Having achieved financial fitness and raising the bar with higher RoCE and margin guidance, revenue recovery has become the sole pending item on its checklist. As large deals are taking time to fructify, management is focusing on smaller-size deal wins to drive revenue growth. The brokerage expects revenue to bounce back from Q2FY22. Consistent delivery on this front with double-digit growth rates in the ensuing quarters should provide confidence to investors. The brokerage believes revenue growth and stability in operating losses in the Incubation Services segment will drive strong operating leverage. It estimates Rs57.5bn of FCF over FY22-24E and the stock trades at an FCF yield of 4.5%. The target valuation does not yet factor in potential land monetization. Key risks: 1) any delay in scaling up the Innovations segment, and continued and elevated losses; 2) poor deal conversion rate; 3) increased competitive intensity; and 4) another Covid-induced disruption.
Promoter/FII Holdings
Promoters held 58.9 per cent stake in the company as of June 30, 2021, while FIIs held 24 per cent, DIIs 7.4 per cent and public and others 9.8 per cent.
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