Buy Tata Communications; target of Rs 1810: ICICI Securities

ICICI Securities is bullish on Tata Communications recommended buy rating on the stock with a target price of Rs 1810 in its research report dated June 29, 2023.

Broker Research

June 30, 2023 / 13:59 IST

Buy

26 Aug, 2025 12:21

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ICICI Securities research report on Tata Communications

Tata Communications (TCom) has agreed to acquire Kaleyra, a US-based omnichannel integrated CPaaS player for enterprise value of US$250mn (0.73x CY22 sales). This is likely to enhance TCom’s global position in CPaaS services (which is growing at 25% CAGR as per Juniper), and with The Switch acquisition, TCom’s position in the US may become stronger. Strong digital businesses in the US can assist TCom to cross sell other products, thereby, improving market share in core connectivity and Digital services. It aims to grow data revenue by 2x to Rs280bn by FY27. The loss-making acquisition may drag EBITDA margin down in the near term; however, TCom aims to reach 23-25% margin in the medium term. Its balance sheet remains healthy, and the acquisition is unlikely to deteriorate the position.

Outlook

We have not baked in the acquisition in our estimates, and with increasing revenue outlook, we increase our valuation multiple (PE) to 24x (from 22x) FY25E, and accordingly raise target price to Rs1,810 (from Rs1,665). Maintain BUY.

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