JM Financial maintains Buy on Tata Communications; target price Rs 2,000
ETMarkets.com
Tata Communications' key products/revenue segments include Telecommunication Services for the year ending 31-Mar-2024.
Financials
For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 6059.15 crore, up 3.99% from last quarter Total Income of Rs 5826.80 crore and up 5.40% from last year same quarter Total Income of Rs 5748.70 crore. The company has reported net profit after tax of Rs 1017.19 crore in the latest quarter.
The company's top management includes Ms.Renuka Ramnath, Mr.A S Lakshminarayanan, Mr.Ankur Verma, Mr.N Ganapathy Subramaniam, Mr.Ashok Sinha, Mr.Krishnakumar Natarajan. Company has S R Batliboi & Associates LLP as its auditors. As on 31-03-2025, the company has a total of 28 crore shares outstanding.
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Investment Rationale
JM Financial maintains FY26-FY28 revenue/EBITDA estimates as they were already conservatively assuming data revenue of ~Rs 273bn in FY28; hence the target price of Rs 2,000 remains unchanged. The brokerage is building in a robust ~24% data segment EBITDA CAGR over FY25-28E driven by a) strong growth in digital portfolio, positioned strongly across key megatrends like cloud, AI, IoT etc.; b) overall EBITDA margin improving from ~20% in FY25 to ~23.8% by FY28 (mid-range of management guidance of 23%-25%) as operating leverage and acquisition synergies are likely to be partly offset by adverse revenue mix. Hence, JM Financial reiterates its BUY rating on Tata Communications based on an 11x FY27 EV/EBITDA multiple for the data segment (vs. 5-year historical average of 10.4x).
Key risks: a) weak global macro leading to deferment in discretionary tech spends; b) significant delay beyond FY27 to get to positive EBITDA margin in Digital portfolio segment; c) adverse AGR ruling.
Promoter/FII Holdings
Promoters held 58.86 per cent stake in the company as of 31-Mar-2025, while FIIs owned 16.99 per cent, DIIs 14.5 per cent.
(You can now subscribe to our
(You can now subscribe to our ETMarkets WhatsApp channel JM Financial has a Buy call on Tata Communications with an unchanged target price of Rs 2,000. The current market price of Tata Communications is Rs 1724.15. The time period given by the analyst is a year when Tata Communications price can reach the defined target. Tata Communications, incorporated in 1986, is a Mid Cap company with a market cap of Rs 48796.28 crore, operating in the telecom sector.Tata Communications' key products/revenue segments include Telecommunication Services for the year ending 31-Mar-2024.For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 6059.15 crore, up 3.99% from last quarter Total Income of Rs 5826.80 crore and up 5.40% from last year same quarter Total Income of Rs 5748.70 crore. The company has reported net profit after tax of Rs 1017.19 crore in the latest quarter.The company's top management includes Ms.Renuka Ramnath, Mr.A S Lakshminarayanan, Mr.Ankur Verma, Mr.N Ganapathy Subramaniam, Mr.Ashok Sinha, Mr.Krishnakumar Natarajan. Company has S R Batliboi & Associates LLP as its auditors. As on 31-03-2025, the company has a total of 28 crore shares outstanding.JM Financial maintains FY26-FY28 revenue/EBITDA estimates as they were already conservatively assuming data revenue of ~Rs 273bn in FY28; hence the target price of Rs 2,000 remains unchanged. The brokerage is building in a robust ~24% data segment EBITDA CAGR over FY25-28E driven by a) strong growth in digital portfolio, positioned strongly across key megatrends like cloud, AI, IoT etc.; b) overall EBITDA margin improving from ~20% in FY25 to ~23.8% by FY28 (mid-range of management guidance of 23%-25%) as operating leverage and acquisition synergies are likely to be partly offset by adverse revenue mix. Hence, JM Financial reiterates its BUY rating on Tata Communications based on an 11x FY27 EV/EBITDA multiple for the data segment (vs. 5-year historical average of 10.4x).: a) weak global macro leading to deferment in discretionary tech spends; b) significant delay beyond FY27 to get to positive EBITDA margin in Digital portfolio segment; c) adverse AGR ruling.Promoters held 58.86 per cent stake in the company as of 31-Mar-2025, while FIIs owned 16.99 per cent, DIIs 14.5 per cent.
(Disclaimer: Recommendations given in this section or any reports attached herein are authored by an external party. Views expressed are that of the respective authors/entities. These do not represent the views of Economic Times (ET). ET does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same. Please consult your financial adviser and seek independent advice.
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