Tata Communications - Aiming To Be A CommTech Player: Motilal Oswal

BQ Prime’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 BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.We attended Tata Communications Ltd.’s analyst meet where the management shared its ‘product-to-platform’ go-to-market strategy by leveraging capabilities for accelerated growth. The key highlight of the event was an ambitious revenue target. The company aspires to double its revenue in the next four years. Please find below the key takeaways: Upping the ante, management stated its ambition to double data revenue to Rs 280 billion over FY23-27E (at 19% compound annual growth rate) versus previous guidance of double-digit growth. This will require higher capex and opex. Management provided $300 million capex guidance in FY24E. This should increase with 10-12% capex-to-sales range beyond FY24E. Further, Ebitda margin guidance is maintained at 23-25% versus 24.2% in FY23; however, Tata Communications indicated that the recent acquisition of The Switch Enterprise may moderate margin below the guidance range in FY24E.Management maintained that it will continue to focus on balance sheet discipline with more than 25% return on capital employed and less than two times net debt to Ebitda. We have factored in revenue/Ebitda compound annual growth rate of 12%/10% over FY23-25E versus 1%/10% over FY20-23 as many of the growth categories still remain in their early stages with longer gestation period..Click on the attachment to read the full report:.Tata Communications - Aims Two Times Data Revenue By FY27: ICICI Securities.DISCLAIMERThis report is authored by an external party. BQ Prime 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 BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Tata Communications - Aiming To Be A CommTech Player: Motilal Oswal

Sustained improvement in earnings growth visibility will be vital for any re-rating.

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