Tata Communications Ltd
NSE:TATACOMM
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Tata Communications Ltd
Intrinsic Value
The intrinsic value of one
TATACOMM
stock under the Base Case scenario is
1 890.66
INR.
Compared to the current market price of 1 751.7 INR,
Tata Communications Ltd
is
Undervalued by 7%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Tata Communications Ltd
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Fundamental Analysis
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Tata Communications Ltd. is a leading global telecommunications company rooted in the renowned Tata Group, which has a legacy dating back over 150 years in India. As a pivotal player in the connectivity landscape, it specializes in providing a wide array of services, including voice, data, and video communications across an extensive network spanning over 200 countries. With an ambitious focus on digital transformation, Tata Communications empowers businesses around the world by delivering secure and reliable connectivity solutions that enhance productivity and enable seamless collaboration. Their innovation-driven approach is underscored by a strong emphasis on emerging technologies such as...
Tata Communications Ltd. is a leading global telecommunications company rooted in the renowned Tata Group, which has a legacy dating back over 150 years in India. As a pivotal player in the connectivity landscape, it specializes in providing a wide array of services, including voice, data, and video communications across an extensive network spanning over 200 countries. With an ambitious focus on digital transformation, Tata Communications empowers businesses around the world by delivering secure and reliable connectivity solutions that enhance productivity and enable seamless collaboration. Their innovation-driven approach is underscored by a strong emphasis on emerging technologies such as IoT (Internet of Things), cloud computing, and digital security.
Investors may find Tata Communications particularly intriguing as it positions itself at the intersection of traditional telecom and innovative digital services, effectively addressing the evolving needs of modern enterprises. The company has maintained a robust financial foundation, showcasing sustainable growth and resilience even amidst challenging market conditions. Tata Communications strategically strengthens its portfolio through strategic partnerships and investments, fostering significant synergies that amplify its service offerings. With a clear vision of leading the digital ecosystem, Tata Communications stands as a compelling opportunity for investors looking to tap into the burgeoning demand for global connectivity and digital solutions, signaling a bright future for the company within the rapidly transforming telecommunications industry.
Tata Communications Ltd. is a prominent global telecommunications and digital services provider based in India. Its core business segments include:
-
Connectivity Services:
- This segment provides a range of network services including international and domestic voice services, data network services, and internet services. Tata Communications operates one of the largest subsea fiber networks in the world, enabling global connectivity.
-
Cloud and Data Center Services:
- Tata Communications offers cloud solutions, including public, private, and hybrid cloud offerings. Its data center services encompass colocation, managed hosting, and cloud-enabled infrastructure, catering to enterprises looking for scalable and secure data solutions.
-
Managed Services:
- This segment provides IT infrastructure management services, including managed security, application performance management, and business continuity services. Tata Communications helps businesses optimize their IT operations through these managed services.
-
Collaboration and Unified Communications:
- The company offers a suite of collaboration tools and unified communication solutions to enhance communication and collaboration among businesses. This includes video conferencing, messaging services, and other communication platforms.
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IoT Solutions:
- Tata Communications provides Internet of Things (IoT) solutions that enable businesses to connect and manage devices securely. This segment focuses on industries such as automotive, healthcare, and smart cities.
-
Digital Transformation Services:
- The company is increasingly focusing on digital transformation, helping businesses integrate digital technologies into their operations. This includes services for big data analytics, AI, and machine learning applications.
-
Wholesale Services:
- Tata Communications serves telecom operators and service providers with wholesale telecommunications services, offering voice, data, and network management solutions on a global scale.
These segments collectively position Tata Communications as a key player in the global telecom and digital services landscape, catering to diverse client needs across various industries.
Tata Communications Ltd holds several unique competitive advantages that differentiate it from its rivals in the telecommunications and digital services industry. Here are some of the key advantages:
-
Global Network Infrastructure: Tata Communications operates one of the largest submarine cable networks globally. This extensive infrastructure allows the company to offer high-quality connectivity and low-latency services to its customers around the world.
-
Integrated Service Offering: The company provides a broad range of services, including voice, data, cloud, security, and IoT solutions. This integrated portfolio makes it a one-stop shop for businesses seeking comprehensive communication and IT solutions.
-
Tata Group Backing: Being a part of the Tata Group, one of India's largest and most respected conglomerates, provides Tata Communications with strong financial support, brand recognition, and trust in the market. This affiliation enhances customer confidence and strengthens business relationships.
-
Focus on Emerging Markets: Tata Communications has a deep understanding of emerging markets, particularly in Asia and Africa. Its localized knowledge and presence in these regions allow it to tailor services to meet the specific needs of businesses operating in these markets.
-
Innovative Technology and Solutions: The company invests in cutting-edge technology, including cloud computing, cybersecurity, and enhanced networking solutions. This commitment to innovation positions Tata Communications favorably against competitors who may not have the same level of investment in technology.
-
Strong Customer Relationships: With a diverse client base that includes large enterprises, service providers, and governments, Tata Communications maintains strong relationships with its customers. Their customer-centric approach and support services contribute to higher customer retention.
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Sustainability Initiatives: Tata Communications is focused on sustainability and corporate social responsibility. Their initiatives in energy-efficient practices and green technology may appeal to increasingly eco-conscious customers and help differentiate them in the market.
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Extensive Data Center Footprint: The company has a significant global presence with numerous data centers that support cloud services, content delivery, and managed services. This allows them to provide reliable service with low latency and high performance.
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Expertise in Network Management: Tata Communications has developed proprietary tools and platforms to manage and optimize network performance, allowing for better service delivery and customer experience.
-
Strategic Partnerships and Alliances: The company has formed strategic partnerships with various tech giants and service providers, enhancing its service offerings and expanding its reach in different markets.
These competitive advantages position Tata Communications Ltd strongly in the marketplace, enabling it to capture a diverse customer base and maintain a leadership position in several areas of the telecommunications and digital services sector.
Tata Communications Ltd, like many organizations in the telecommunications and data services sector, faces several risks and challenges that could impact its performance in the near future. Here are some of the most relevant ones:
1. Competitive Landscape
- Intense Competition: The telecommunications industry is characterized by intense competition from both established players and new entrants, which can lead to pricing pressures and reduced profit margins.
- Technological Advancements: Competitors may leverage advancements in technology faster, offering superior services or lower prices.
2. Regulatory Risks
- Changing Regulations: The telecom sector is heavily regulated, and changes in government policies or regulations can impose additional operational costs or limits on service offerings.
- Spectrum Allocation: Issues related to spectrum allocation and management can affect operational capabilities and future growth prospects.
3. Market Demand Fluctuations
- Economic Changes: Global economic downturns can lead to reduced business investment in telecommunications services.
- Changing Consumer Preferences: Rapid shifts in consumer behavior, especially with the rise of OTT (Over-The-Top) services, can impact traditional revenue streams.
4. Technological Disruption
- Emerging Technologies: The rise of technologies such as 5G, IoT (Internet of Things), and cloud computing requires continuous investment in infrastructure and R&D.
- Cybersecurity Threats: Increasing reliance on digital services poses risks related to data breaches, requiring robust cybersecurity measures.
5. Supply Chain Vulnerabilities
- Global Supply Chain Issues: Disruptions caused by geopolitical tensions, natural disasters, or pandemics can impact the availability of critical hardware and technology.
- Vendor Dependencies: Reliance on key suppliers for infrastructure and technology can create risk, especially if those suppliers face their own challenges.
6. Financial Health and Investment Risks
- Debt Levels: Maintaining a healthy balance sheet is crucial, especially if the company carries significant debt, which could impact its ability to invest in growth opportunities.
- Cost Management: Rising operational costs due to inflation or increasing service demands need effective management to maintain profitability.
7. Geopolitical Factors
- Tensions in Key Markets: Political instability or tensions in regions where Tata Communications operates can affect operations or market access.
- Trade Restrictions: Tariffs or trade restrictions can impact the cost structure and sourcing abilities.
8. Customer Retention and Experience
- Customer Expectations: Increasing expectations for service quality and customer support mean that Tata Communications must constantly enhance its service delivery.
- Churn Rates: High customer churn can affect revenue stability. Retaining clients, especially in enterprise markets, is vital.
Strategies for Mitigating Risks
To navigate these challenges, Tata Communications can focus on strategies like investing in technological upgrades, enhancing customer service, diversifying service offerings, exploring partnerships or acquisitions, and maintaining a strong compliance posture with regulatory changes. Continuous monitoring of market dynamics and customer needs will also be essential to adapt proactively.
By assessing these risks and challenges, Tata Communications can better prepare and strategize for sustained growth and competitive advantage.
Revenue & Expenses Breakdown
Tata Communications Ltd
Balance Sheet Decomposition
Tata Communications Ltd
| Current Assets | 68.7B |
| Cash & Short-Term Investments | 9B |
| Receivables | 43.4B |
| Other Current Assets | 16.3B |
| Non-Current Assets | 183.5B |
| Long-Term Investments | 18.1B |
| PP&E | 95B |
| Intangibles | 48.2B |
| Other Non-Current Assets | 22.1B |
| Current Liabilities | 112.7B |
| Accounts Payable | 37.1B |
| Other Current Liabilities | 75.5B |
| Non-Current Liabilities | 121.7B |
| Long-Term Debt | 89.4B |
| Other Non-Current Liabilities | 32.3B |
Earnings Waterfall
Tata Communications Ltd
|
Revenue
|
227.3B
INR
|
|
Cost of Revenue
|
-94.4B
INR
|
|
Gross Profit
|
132.9B
INR
|
|
Operating Expenses
|
-114.3B
INR
|
|
Operating Income
|
18.6B
INR
|
|
Other Expenses
|
-9.3B
INR
|
|
Net Income
|
9.3B
INR
|
Free Cash Flow Analysis
Tata Communications Ltd
| INR | |
| Free Cash Flow | INR |
In Q2 FY '25, Tata Communications achieved consolidated revenue growth of 18.4% year-on-year, driven largely by a 52.4% increase in digital services. Data revenues also rose by 21%. EBITDA margins stand at 19.4%, with plans to reach 20% for the year. The company aims for INR 28,000 crores in revenue by FY '27, with digital contributing 60%. Key initiatives include asset monetization, such as a proposed land sale expected to bring in INR 750-850 crores. With improving order bookings, the future appears promising, despite a slow macro environment impacting some segments.
What is Earnings Call?
TATACOMM Profitability Score
Profitability Due Diligence
Tata Communications Ltd's profitability score is 69/100. The higher the profitability score, the more profitable the company is.
Score
Tata Communications Ltd's profitability score is 69/100. The higher the profitability score, the more profitable the company is.
TATACOMM Solvency Score
Solvency Due Diligence
Tata Communications Ltd's solvency score is 26/100. The higher the solvency score, the more solvent the company is.
Score
Tata Communications Ltd's solvency score is 26/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
TATACOMM Price Targets Summary
Tata Communications Ltd
According to Wall Street analysts, the average 1-year price target for
TATACOMM
is 1 987.98 INR
with a low forecast of 1 661.45 INR and a high forecast of 2 331 INR.
Click here to dive deeper.
Dividends
Current shareholder yield for TATACOMM is
.
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Profile
Tata Communications Ltd
Country
Industry
Market Cap
Dividend Yield
Description
Tata Communications Ltd. engages in the provision of telecommunications services. The company is headquartered in Mumbai, Maharashtra and currently employs 12,348 full-time employees. The Company’s segments include Voice Solutions (VS), Data and Managed Services (DMS) and Real Estate (RE).The VS segment includes international and national long distance voice services. The DMS segment includes corporate data transmission services, virtual private network signaling and roaming services, television, and other network and managed services. The RE segment includes lease rentals for premises given on lease and does not include premises held for capital appreciation. The Company’s subsidiaries include Tata Communications Transformation Services Limited, Tata Communications Collaboration Services Private Limited, Tata Communications Payment Solutions Limited, Tata Communications Lanka Limited, Tata Communications International Pte. Limited and TC IOT Managed Solutions Limited.
Contact
IPO
Employees
Officers
The intrinsic value of one
TATACOMM
stock under the Base Case scenario is
1 890.66
INR.
Compared to the current market price of 1 751.7 INR,
Tata Communications Ltd
is
Undervalued by 7%.
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