Motilal Oswal has given Neutral recommendation for Tata Communications with a target price of Rs. 1100 in its research report issued on Oct 19, 2022
Motilal Oswal’s research report on Tata Communications
Revenue/EBITDA grew 2.8%/4.9% QoQ after modest growth (of 1% each) in the last few quarters, backed by healthy Data revenue/EBITDA growth of 4.6%/3.9%. Margin improved by 50bp to 25.5%, way above the management’s guidance of 23-25%. FCF remains strong at INR6.2b, with RoCE healthy at 28%. We have marginally cut our consolidated EBITDA, factoring in a moderate revenue/EBITDA CAGR of 9%/10% over FY22-24. While growth in Data segment has been soft, healthy FCF generation and continued deleveraging remain the silver lining, aiding valuation. We maintain our Neutral rating.