ICICI Direct recommended hold rating on Tata Communications with a target price of Rs 540 in its research report dated May 10, 2019.
ICICI Direct's research report on Tata Communications
Tata Communications’ (TCL) Q4FY19 performance was a mixed bag with a slight beat on topline, margins (owing to one time settlement benefit) and loss on bottomline due to impairment of goodwill and intangibles recognised by its subsidiary. Topline beat (Rs 4243.5 crore vs. our estimates of Rs 4184 crore) was mainly the function of higher data segment growth (up 14.2% YoY at Rs 3343 crore, primarily driven by growth services (up ~25% YoY in rupee terms). Margins at 16.1% (vs. 15.6% estimated) were higher due to one-time settlement in voice segment. The reported loss was Rs 198.8 crore vs. expectation of Rs 21 crore PAT, primarily due to impairment of goodwill and intangibles recognised by SIT Tai Seng Pte Ltd (its subsidiary – holds 26%) of Rs 172.4 crore coupled with higher tax expenses.
Outlook
We continue to maintain our HOLD rating on the stock, valuing it at Rs 540/share on an SoTP basis. The target price is inclusive of the value from the land bank. Furthermore, acquisition of TTSL is still awaited. If undertaken, it could result in increase in leverage, which is negative.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
