Tata Communications Q2 Review - Steady Performance; One-Offs Aid Ebitda, PAT: ICICI Direct
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ICICI Direct Report
Tata Communications Ltd. reported stable core Q2 FY22 results.
Topline at Rs 4,174 crore was down 5.2% YoY, up 1.7% QoQ with data segment revenues declining 2.2% YoY (on high base) but showing modest 1.1% QoQ growth
Consolidated Ebitda margin was at 26.7% (up 36 bps YoY, 263 bps QoQ) aided by one-off Rs 50 crore for timing difference led employee cost benefit and reversal of provisions. Profit after tax of Rs 425 crore was up 10.6% YoY and 43.7% QoQ, owing to one-off benefits in margins and lower tax rate
Key triggers for future price performance;
Growth will be driven by platforms such as...
a) cloud, edge and security
b) next generation connectivity
d) MOVE and IoT
...wherein each have robust market size growth potential of 15-25% CAGR in next four to five years.
We expect ~7% revenue CAGR in FY21-23E in the overall data segment, driven by likely acceleration in growth from H2 FY22 onwards. We expect overall margins to at 25.5% in FY23 vs. 24.9% in FY21.
Strong cash flow generation to aid deleveraging.
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