Q4FY21 Result Update - Tata Communications - ICICI Direct

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.

Valuation & Outlook

The company's strategic growth plan, focused approach and structural improvement in data segment margins has driven multiple re-rating. While deal closures delays could have near term weakness in revenues, demand outlook is robust in the medium/long term and recovery is likely over the next couple of quarters. Furthermore, stable performance and improved cash flow generation, deleveraging possibilities (already reduced net debt by Rs. 1390 crore over FY21) and improved return ratios bode well for the company. Thus, 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.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TataComm_Q4FY21.pdf

Shares of TATA COMMUNICATIONS LTD. was last trading in BSE at Rs.1100.05 as compared to the previous close of Rs. 1109.25. The total number of shares traded during the day was 22437 in over 1150 trades.

The stock hit an intraday high of Rs. 1124 and intraday low of 1081.05. The net turnover during the day was Rs. 24674068.

Source : Equity Bulls

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