Motilal Oswal: Tata Communications’ Cost Efficiency Aids Ebitda Growth  

Motilal Oswal Report

Tata Communications Ltd.’s Q1 FY21 revenues were in line. Consolidated revenues at Rs 44 billion (in-line), voice segment revenue at Rs 8 billion and data segment revenues at Rs 36 billion were flat QoQ.

Selling general and administrative expenses declined 18% QoQ due to one-time benefits owing to drop in travel and office expenses. Thus, overall operating costs declined 5% QoQ.

Consolidated Ebitda jumped 20% QoQ (15% beat) to Rs 10.4 billion. Ebitda margin expanded by 390 basis point QoQ to reach 23.7%.

Pre Indian accounting standards (Ind AS-116) Ebitda is estimated at approximately Rs 9.7 billion (up 22% QoQ) with margins at 22.1%.

Reported profit after tax stood at Rs 2.6 billion. Adjusted PAT (for exceptional items) was up 2.6 times QoQ to Rs 2.7 billion.

Capex for Q1 FY21 was Rs 3.7 billion (versus Rs 3.4 billion in Q4 FY20). Net Debt as at Q1 FY21 reduced by Rs 1.7 billion QoQ to Rs 90 billion.

Data Ebitda was up 19% QoQ to Rs 9.8 billion (contributing 94% of total Ebitda). Ebitda margin expanded 420 basis point to 27.1%, on the back of continued focus on cost efficiencies and lower cost due to the lockdown.

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