Tata Communications (TCOM) is the leading global digital ecosystem enabler. It provides its clientele with state-of-the-art solutions across a wide range of communication, collaboration, cloud, mobility, connected solutions, network and data centre services.TCOM reported a weak quarter on the margins front. Topline came in at Rs 4569 crore, up 7.2% YoY & up 0.9% QoQ, driven by data revenues (forming ~80% of revenues), which was up ~11.2% YoY (up 2.2% QoQ) at Rs 3670 crore. Incubation services and Digital Platforms segment of data business grew ~65% and 16% YoY, respectively. Voice revenues were down 13.9% YoY (down 8.6% QoQ) at Rs 462 crore.
OutlookWe maintain our HOLD rating as the growth – margin construct remains out of sync. We value TCOM at a target price of Rs 1250.
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