(CMP - Rs. 1442; MCap - Rs. 41,101 crore)
Tata Communication reported better than expected profitability aided by one-offs.
Q2FY22 earnings summary
- Topline came in at Rs. 4174 crore, down 5.2% YoY & up 1.7% QoQ, largely in line with expectations. The data revenues (forming ~75% of the revenues) declined by 2.2% YoY (up 1.1% QoQ), primarily due to moderation of Collaboration traffic which was at peak during Q1 and Q2 of last year. Voice segment continued to remain weak with revenues down 20.1% YoY (up 2.9% QoQ) at Rs. 606 crore
- Consolidated EBITDA came in at Rs. 1113 crore, down 3.9% YoY and up 12.9%QoQ. The consequent margin was at 26.7% (up 36 bps YoY and 263 bps QoQ). We highlight that EBITDA has some onetime benefits; 1) cost benefit from the timing difference in hiring new employees to fulfil open positions in the organization, and 2) reversal of provision of doubtful debts due to better collection efforts. Adjusted for the same, we believe EBITDA was flattish QoQ on expected lines. Data EBITDA margin was at 33.4%, up 340 bps QoQ and down 42 bps YoY, largely aided by one-offs mentioned above. Voice segment margins was at 7.6%, up 310 bps QoQ
- The company reported a PAT of Rs. 425 crore (up 10.6% YoY and 43.7% QoQ) vs. expectations of Rs. 304 crore, with beat owing to one off one benefits in margins and lower tax rate
- There was a sequential decline in net debt by ~Rs. 240 crore QoQ on the back of a better working capital mix and improvement in operating profit. The Net Debt to annualised EBITDA stood at comfortable levels of 1.7x as compared to 1.9x in Q1
Tata Communication remains a key beneficiary of new normal of hybrid work structure, increased conferencing needs thereof and overall digitisation at enterprise levels.
Shares of Tata Communications Limited was last trading in BSE at Rs. 1387.50 as compared to the previous close of Rs. 1427.85. The total number of shares traded during the day was 36165 in over 4664 trades.
The stock hit an intraday high of Rs. 1460.00 and intraday low of 1372.10. The net turnover during the day was Rs. 50643978.00.