Tata Communications stock slips 5% as Q3 earnings miss estimates

Tata Communications stock fell nearly 5% today after the firm's Q3 earnings came below street expectations. Share of Tata Communications slipped 4.71% to Rs 1,450 against previous close of Rs 1,522.45 on BSE. Tata Communications stock trades higher than 20 day, 50 day, 100 day and 200 day moving averages but lower than 5 day moving averages.

The large cap stock has gained 39.04% in one year and fallen 0.29% since the beginning of this year. In a month, the stock has gained 11.59%. Total 2.09 lakh shares of the firm changed hands amounting to a turnover of Rs 30.48 cr on BSE.

Market cap of the Tata Group firm fell to Rs 17,039 crore. The stock hit a 52-week high of Rs 1,590 on January 17, 2022 and a 52 week low of Rs 930.05 on February 24, 2021.

The firm reported a 27.8 per cent rise in consolidated net profit at Rs 395 crore against a net profit of Rs 309 crore in the year-ago period.

Sales came in flat at Rs 4184 crore against Rs 4,222.83 crore a year ago. The company's consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 3.5 per cent to Rs 1,082.5 crore against Rs 1046 crore in Q3 of last fiscal.

On a quarter on quarter basis, the firm reported a 7.09 per cent fall in consolidated net profit from Rs 425.38 crore in Q2 of the current fiscal.

The company stated that sequential growth in data business continued and revenues rose 3.4 per cent YoY at Rs 3,233 crore. All three segments (Core Connectivity, Digital Platforms, & Incubation services) of Data business witnessed healthy growth, it added.

Motilal Oswal has assigned a neutral rating to the stock.

"Tata Communications' consolidated 3QFY22 revenue was flat QoQ at Rs 4180 crore led by a 3% growth in data revenue (the key growth driver), even as voice and other segments declined sharply. The modest sequential topline growth was propelled by a gradual pick up in business across all data segments. EBITDA declined 2.7% QoQ to Rs 1080 crore (6.6% below our estimate).

Accordingly, EBITDA margin contracted 80 bps sequentially to 25.9%. Normalising for one-off benefits of INR500m in 2QFY22 (related to employee cost and reversal of provisions), EBITDA grew 1.8% QoQ with 50 bps improvement in margin," said the financial services firm.