Tata Communications up 5%, BoA ML initiates with buy rating

Moneycontrol Bureau

Shares of Tata Communications jumped 5 percent intraday on Wednesday. Bank of America Merill Lynch has initiated coverage on the telecom company with a buy rating. The brokerage has set target price of Rs 545 per share.

BoAML says that Tata Communications is well-placed to benefit in the high-growth high-margin enterprise of data business. It expects margins to improve 17 percent in FY18 from 15 percent in FY15.

According to BoAML two deleveraging catalysts will be Neotel & data-center stake-sale. "These deleveraging options can unfold in 6-12 months. The company debt can reduce by 23-50 percent," it states in a note.