Motilal Oswal's research report on Tata Communications
Normalized EBITDA growth was soft at 2% (7% below our estimate), but the key silver lining was the steady net debt decline for the second quarter in a row by ~INR6b to INR71.9b on better working capital mix and robust OCF generation. We expect 10% revenue CAGR over FY22-24E as Connectivity (~70% revenue mix) has a low growth outlook. We factor in an improvement in margin on a favorable Data mix, curbing of losses in the Incubation business, and 15% EBITDA CAGR. We maintain our Neutral rating.
Outlook
We maintain our Neutral rating with a TP of INR1,450/share (assigned 9x/3x EBITDA to the Data/Voice business).
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