Tata Communications is a player in the digital technology ecosystem with a portfolio of products around data and voice. A smaller segment includes Tata Communications Payment Solutions and Tata Communications Transformation Services. The offerings from the company, among others, are in the areas of WAN ethernet, global VPN and international private lines.
Here are a few takeaways from the recent financial results:
Net profit: On a consolidated basis, it dropped by 2.1 per cent to Rs 532 crore in the second quarter (Q2) of the current fiscal compared to Rs 544 crore in Q1. Gross revenue moved up to Rs 4,431 crore from Rs 4,311 crore during the same period as did EBITDA.
Business segments: The company’s two segments – voice and data – saw revenues move up, with the latter bringing the lion’s share of the revenue at 79 per cent. The company’s management spoke of healthy growth in international markets and how continued efforts of shifting products to platforms has been yielding positive results.
Importantly, the analyst meet held in June this year saw Tata Communications’ management reiterating its strategy on platform transformation with a focus on on product innovation, new launches, higher customer wallet share and financial fitness to accelerate topline growth. A report put out by Emkay then spoke of how, in the last two years, the company has delivered on its financial fitness goals, though revenue recovery has seen a delay. “The management sounded positive about the improving funnel rate, potential deal conversions, new product launches and increased investments. However, it continued to be non-committal regarding revenue growth guidance.”
Outlook: According to Deven Choksey, MD, K R Choksey Securities, the outlook for the company looks positive but “there is a need to listen to the management.” To him, the business model in shape and there is also a steady rate of growth. “We need to be cautiously optimistic since the stock like a good part of the market is fully priced.” On the numbers for Q2, he expresses no surprise and points out it is on the back of “a revised pricing model and better yield pricing.”
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