ICICI Direct is bullish on Tata Communications has recommended buy rating on the stock with a target price of Rs 720 in its research report dated February 12, 2018.
ICICI Direct's research report on Tata Communications
One of the highlights of the quarter was superior margins in the data segment. Data margins at 18.7% saw a sequential improvement of 110 bps. The management attributed the same to cost optimisation coupled with a sharp expansion in high-margin traditional services business. In terms of data revenues, it grew 4.3% YoY (6.8% on a like-to-like basis). Growth services continued to drive overall data segment, up 38.5% YoY, while traditional data services revenues were up 5.7% YoY.
We also build in impact of US$ 50 million on revenues, US$ 8 million on EBITDA, owing to closure of TTSL business. However, the recent stock price correction (10% since our last update), enables us to upgrade the stock to BUY, valuing it at Rs 720/share. The target price is inclusive of the value from the land bank.
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