Emkay Global Financial's research report on Tata Communications
TCOM posted 7.2% YoY/0.9% QoQ revenue growth in Q4FY23, with EBITDA margin at 22.6%, which was below consensus/our estimate. The Data segment delivered doubledigit revenue growth for the third quarter in a row (+11.2%YoY). Growth in digital platforms was strong at 15.9%YoY, while core connectivity grew by 7.4%YoY. Cloud, Hosting and Security witnessed strong YoY growth. Net Debt reduced to Rs57.1bn in Q4 vs. Rs62.7bn in the previous quarter, as FCF increased to Rs6.3 bn in Q4FY23 vs. Rs3.3bn in Q3FY23.
Outlook
We expect the investment in new capability build-up and manpower addition to fuel doubledigit growth in the data segment in FY24-25. TCOM would clock consol. revenue/EBITDA CAGR of ~8% each over FY23-25E and margin at 23.6%/24.2% in FY24E/FY25E. We resume coverage with a BUY rating and TP of Rs1,470/share (10x Mar-25E EBITDA).
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