Tata Communications share price falls 3% on weak Q4 numbers
CLSA has reiterated 'buy' rating on acceleration in data revenue growth and has kept the target at Rs 1,475 a share.
April 29, 2021 / 12:50 PM IST
Tata Communications share price fell 3 percent intraday on April 29 after the company reported a weak set of numbers for the quarter ended March 2021.
The company reported a 12.5 percent fall in its Q4 net profit at Rs 270.6 crore from Rs 309.4 crore in the previous quarter. Revenue was down 3.5 percent at Rs 4,073.3 crore versus Rs 4,222.8 crore.
Earnings before interest, tax, depreciation and amortization (EBITDA) were down 3 percent at Rs 1,015.2 crore from Rs 1,046.1 crore and margin was at 24.92 percent versus 24.77 percent QoQ.
Revenue was weak due to COVID-19 related factors that led to a longer deal conversion and execution cycle. The company returned to sustained improvement in profitability led by focus on cost optimisation and that should continue to drive overall profit, Yes Securities said.
An uptick in growth services is expected to drive overall revenue growth. Moderation in capital expenditure and strong operating cashflow generation would continue to help in deleveraging the balance sheet, it added.
Motilal Oswal maintained "neutral" view on the stock. The decline in data EBITDA margin can be attributed to a fall in revenue, coupled with higher R&M expenses and one-time catch-up costs in growth services.
Revenue for the innovation segment rose 15.6 percent QoQ to Rs 370 million and EBITDA loss increased to Rs 1.07 billion, while the transformation segment saw a QoQ revenue growth of 5.9 percent at Rs 3.4 billion.
CLSA has reiterated buy on acceleration in data revenue growth and kept target at Rs 1,475 per share.
The data revenue was hit by longer deal conversion and execution cycle in COVID-19
At 1218 hours, Tata Communications was quoting at Rs 1,118.90, down Rs 30.25, or 2.63 percent.