ICICI Direct's research report on Tata Communications
Tata Communication’s Q4FY21 revenues were weak largely due to Covid related weakness in deal conversion and tapering down of UCC traffic impacting data revenues growth. Topline came in at Rs 4073 crore, down 7.4% YoY, 3.5% QoQ as data revenues (forming ~86% of revenues) declined 2.2% YoY (down 0.9% QoQ). Consolidated EBITDA came in at Rs 1015 crore, up 16.8% YoY, down 3.1% QoQ. The consequent margin was at 24.9% (up 517 bps YoY, 15 bps QoQ). Data EBITDA margin was at 27.9%, up 500 bps YoY (down 100 bps QoQ, impacted by one-off catch-up costs). PAT came in at Rs 299 crore.
Outlook
We maintain BUY with a revised SoTP target price of Rs 1290/share (vs. 1210/share earlier), as we raise our data segment target multiple to 9x EV/EBITDA vs. 8x earlier
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