Tata Communications Q4 Review - Deal Conversions Remain Lackluster: Motilal Oswal

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Motilal Oswal Report

Tata Communications Ltd.’s Q4 FY21 revenue/Ebitda missed our estimates by 5%/8% on lower-than-expected revenues in both the data and voice segments – due to slower deal to revenue conversion cycles.

We have marginally revised down our revenue/Ebitda estimates for FY22/FY23E on lower earnings expectations and slower traction in revenue.

The management targets double-digit data revenue growth in the medium term, and margins are expected to remain healthy.

The revenue conversion cycle for larger deals has further stretched to 258 days in FY21 from 203 days in FY20 (due to Covid-19), but this is expected to be short-lived.

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