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Buy Tata Communications; target of Rs 1485: ICICI Direct

ICICI Direct is bullish on Tata Communications recommended buy rating on the stock with a target price of Rs 1485 in its research report dated June 10, 2021.

June 15, 2021 / 11:21 AM IST
 
 
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ICICI Direct's research report on Tata Communications


Tata Communication (TCom) in its investor day revisited (and revised some of) its strategic growth path. The core growth path remained same with steps like deeper engagement with key clients (along with dedicated team for remaining clients), revamped operating structure, transformation from product to platform and Focus on Fixed + Usage model for digital platforms. On the medium term financial targets, there were few upgrades with a) RoCE target of 25-30% (vs. 20% target earlier), b) EBITDA margin of 23-25% (earlier guidance: 22-25%), c) maintaining optimal debt (vs. debt reduction guidance earlier) and d) double digit data revenues target (same as before) with incremental margin buffer/cash being reinvested to drive growth.


Outlook


Thus, we maintain BUY with a revised SoTP target price of Rs 1485/share (earlier Rs 1290/share), as we raise our data segment target multiple to 10x EV/EBITDA vs. 9x earlier.


For all recommendations report, click here

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first published: Jun 15, 2021 11:21 am

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