Tata Communications Ltd is the primary provider of international and national voice and data transmission long-distance services, internet dial-up, broadband services and some other value-added services. The company has diversified its businesses by way of acquisitions and tapping new markets.
The company’s stock opened its trading session today at Rs 1,269 and closed at a price of Rs 1,262. The scrip witnessed a downfall of around 0.7 percent in comparison to the previous closing price of Rs 1,270.95.
The financials of Tata Communications showcase a contrasting pattern of reporting as far as the revenue and net profit numbers are concerned. Revenues of the company shifted from Rs 4,431 crores in Q2 to Rs 4,528 crores in Q3. Net profits took a shift from Rs 527 crores in Q2 to Rs 387 crores in Q3.
Basic profitability measures such as the ROE and ROCE improved in the recent financial years with ROE turning from nil to an abnormally high figure of 283 percent during FY21-22. ROCE figures transitioned from 20.79 percent in FY20-21 to 24.98 percent in FY21-22. The return on asset (ROA) too reported increasing percentages with 5.84 percent during FY20-21 and 7.3 percent in FY21-22.
Having a say on the net profits, the same increased, on a YoY basis, from 7.33 percent in FY20-21 to 8.84 percent in FY21-22.
As per the quarter ending December 2022, promoters hold a constant 58.86 percent stake in the company. FIIs increased their stake from 17.02 percent in Q2 to 17.28 percent in Q3.
ICICI Securities has given a ‘Buy’ tag to Tata Communications with a target price of Rs 1,640 indicating an upside of around 30 percent as compared to the current price levels.
The rationale for providing the target is pertaining to the steady revenue growth in its data business on easing supply-chain issues and stable segmental margins on a QoQ basis.
Written by Amit Madnani
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