Tata Communications - Global Data Service Cost Savings And Margin Outlook: ICICI Securities
BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Tata Communications Ltd.’s Global Data Services business has seen 11.6 percentage point expansion in Ebitda margin to 28.2% in FY21, which has helped it improve Free Cash Flow and Return On Capital Employed.
We have deep dived to understand the costs, which have helped in margin expansion, and see if they are sustainable.
Network cost has added 340 basis points to margin and we expect an upside from operating leverage.
Employee cost added 175 basis points to margin, and considering it is 19.8% of revenue, we see more headroom for margin.
Other expenses added 600 basis points to margin of which repair and maintenance has been a drag. We see flattish R&M cost in coming years.
Margin of 100-120 bps within other expense was on account of Covid-related savings, which will return on normalisation.
Click on the attachment to read the full report:
This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.