Result Analysis: Tata Communications Ltd. (CMP: Rs.1383) Result Update: Q3FY23

Tata Communications is an Indian telecommunications company engaged in the next level of intelligence powered by Cloud, Mobility, Internet of Things IoT, Collaboration, Security, Media services and Network services. The company’s global network includes one of the most advanced and largest submarine cable networks. Tata Communication is in the top 5 IP providers on 5 continents and offer public and private network connectivity to more than 240 countries and territories.


    Open FREE* Demat & Trading Account & ₹0 AMC for first year


    Stock Details
    Market Cap. (Cr.) 39413
    Equity (Cr.) 285.00
    Face Value 10
    52 Wk. high/low 1430 / 856
    BSE Code 500483  
    Book Value (Rs) 31.84
    Sector Telecomm-Service
    Key Ratios
    Debt-equity: 19.67
    ROCE (%): 13.30
    ROE (%): 35.53
    TTM EPS: 62.39
    P/BV: 43.4
    TTM P/E: 22.17

    Result Highlights:

    • Tata Communications’ Consolidated Revenue has increased by 8.21% YoY and 2.2% on QoQ basis to Rs.4528 cr. in Q3FY23.

    • Operating profit has decreased by 0.47% YoY and 4.63% on QoQ basis to Rs.1077cr. Operating profit margin of the company stood at 23.8%, declined sequentially as well as on YoY basis by 170bps and 207bps respectively due to the tepid revenue growth and increased employee expense.

    • Finance cost of the company has increased significantly by ~26% on QoQ and 47% YoY basis to Rs.123 cr. in the quarter.

    • Net Profit for the Q3FY23 has come at Rs.387 cr. compared to Rs.527 cr. in the Q2FY23 and Rs.388 cr. in the Q3FY22. A decline of 26.6% QoQ and 0.26% on YoY basis.
    • Consolidated capex for the quarter stood at Rs.391 cr. compared to Rs.400 cr. in the previous year same quarter.

    • Company’s Revenue from Voice solutions which accounts 11% in the total revenue, has decreased sequentially by 3.6% and 8.7% on YoY basis.

    • Data services segment revenue has increased by 2.9% QoQ and 11% YoY backed by consistent delivery in core connectivity and digital platforms and services. The segment is currently accounts 79.7% in the total revenue.

    • Revenue% from India has increased sequentially by 50bps while decreased by 50bps in the revenue from Rest of the World.

    Financial Performance:

    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 58.86
    FIIs 17.66
    DIIs 13.93
    Public 8.18
    Others 1.37

    Management Commentary:

    • Commenting on the December results, A.S Lakshminarayanan, MD and CEO, said, we are pleased to deliver another strong quarter with broad based growth in our Data business across India and international markets. Our expanding portfolio of digital fabric capabilities is enabling us to drive deeper customer engagements improving our funnel and order book.”

    • Kabir Ahmed Shakir, CFO, said, “This was another quarter of a growth momentum in our Data Portfolio, reflective of our investments in our people and innovative solutions, in line with our customer’s evolving digital needs. Our focus on financial prudence has allowed us to drive inorganic expansion of our global footprint.”


    Tata Communications has reported overall muted performance in the December’22 quarter with stagnated growth of 2.2% in Revenue and degrowth of 26.6% in the Net Profit compared to September’22 quarter. Rising interest cost (by ~25% QoQ) has majorly impacted the net profits of the company and on the revenue front, rising competition and prevailing macro headwinds have added additional pressures. Company’s revenue% from other geographies has declined in the Data services segment for the quarter. The company has recorded 11% YoY growth in the data services segment and 6% YoY growth in the core connectivity portfolio in Q3FY23. The management remains positive with the expanding order book and customer engagements. For the nine months of FY23 Tata Communication has reported the earnings of Rs.51.58 and we expect the company to close the FY23 at the eEPS of Rs.68.7. Based on the estimated earnings the expected PE of the company is 20x at the CMP of Rs.1383.


    Particulars (In Rs. Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ% YoY% 9MFY23 9MFY22 FY22
    Revenue from Operations 4,528 4,431 4,185 2.20% 8.21% 13,270 12,462 16,725
    Other Income 31 37 19 -16.03% 63.56% 301 69 332
    Total Income 4,559 4,467 4,204 2.05% 8.45% 13,571 12,530 17,057
    Network and transmission expense 1,616 1,563 1,530 3.40% 5.61% 4,737 4,659 6,199
    Employee expense 921 870 734 5.80% 25.49% 2,598 2,272 3,040
    Other Expense 914 868 838 5.34% 9.04% 2,651 2,349 3,258
    EBITDA 1,077 1,130 1,082 -4.63% -0.47% 3,284 3,181 4,227
    EBITDA Margin (%) 23.8% 25.5% 25.9% -1.70% -2.07% 24.7% 25.5% 25.3%
    Finance Cost 123 98 83 25.46% 47.00% 300 270 360
    Depreciation & Amortisation expense 555 552 542 0.58% 2.28% 1643 1616 2205
    Exceptional Items 76 8 76 27 6
    Profit Before Tax (PBT) 431 593 484 -27.40% -11.00% 1718 1391 2000
    Tax 44 66 96 -33.82% -54.51% 269 279 522
    Profit After Tax (PAT) 387 527 388 -26.60% -0.26% 1449 1112 1478
    PAT Margin (%) 8.5% 11.9% 9.3% -3.35% -0.73% 10.9% 8.9% 8.8%
    EPS (in Rs.) 13.82 18.68 13.87 -26.02% -0.36% 51.58 39.18 51.99
    Segment Revenue (In Rs. Cr.) Q3FY23 Revenue% Q2FY23 QoQ% Q3FY22 YoY%
    Voice Solutions 506 11.2% 524 -3.6% 554 -8.7%
    Data Services 3,609 79.7% 3,507 2.9% 3,247 11.1%
    Payment Solutions 50 1.1% 46 8.4% 44 13.9%
    Transformation Services 358 7.9% 347 3.3% 337 6.3%
    Real Estate 50 1.1% 49 0.9% 44 12.4%
    Less: Inter Segment Revenue 43 1.0% 43 1.9% 41 6.3%
    Total 4,528   4,431   4,185  
    Source: Company website, EWL Research

    Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014

    Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
    For analyst certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)
    Disclosure Appendix
    Analyst Certification (For Reports)
    Israil Khan, Elite Wealth Limited,
    The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.
    As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
    (1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
    (2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.
    For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
    Research Excerpts
    This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit
    Company-Specific Disclosures
    Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting, or emailing with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail
    Options related research:
    If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at
    Other Disclosures
    All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.
    Ownership and material conflicts of interest Disclosure
    Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
    Country Specific Disclosures
    India – For private circulation only, not for sale.
    Legal Entities Disclosures
    Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone:011-43035555, Facsimile: 011-22795783 and Website:
    EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
    1. Reports
    a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;
    (b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;
    (c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
    2. Compensation
    (a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
    (b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
    (c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
    (d) EWL or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
    (e) EWL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report.
    3 In respect of Public Appearances
    (a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
    (b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL