Buy Tata Communication; target of Rs 2000: ICICI Securities

ICICI Securities research report on Tata Communication

We hosted Tata Communications (TCom)’s management – Mr. Kabir Ahmed Shakir, CFO – for an NDR in the UK. Summarily, we learn, TCom remains excited about its digital business as key parameters are advancing encouragingly, and order book (OB) growth remains healthy. Further, TCom was faced with certain challenges in Kaleyra, and core connectivity – the company is making headway towards the resolution of both; accordingly, growth and profitability outlook remains healthy. Alongside, TCom reiterated its guidance of achieving data revenue of INR 280bn with EBITDA margin of 23–25% by FY28.

Outlook

We retain our estimates, and TP at INR 2,000 (core business EV/EBITDA multiple to 12x). We upgrade our rating to BUY (from Add) post the recent stock price correction.

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