Tata Communications - Q4FY22 First Cut - ICICI Direct

(CMP - Rs. 1282; MCap - Rs. 36,537 crore)

Tata Communications' Q4FY22 performance was soft with data segment revenues showing improvement both YoY and QoQ, on expected lines but back-ended costs led by economic reopening impacting operating profits.

Q4FY22 earnings summary

- Topline came in at Rs. 4263 crore, up 4.7% YoY & up 1.9% QoQ, largely in line with expectations. The data revenues (forming ~77% of the revenues) was up ~7% YoY (up 2.1% QoQ) at Rs. 3301 crore, due to pick up in business and improvement across all Data segments, as expected. Voice segment continued to remain weak with revenues down 3.8% YoY (down 3.1% QoQ) at Rs. 537 crore. FY22 Revenues were down 2.2% YoY at Rs. 16,725 crore, with data revenues growth of 1.2% YoY and Voice revenues decline of ~18% YoY

- Consolidated EBITDA came in at Rs. 1045 crore, up 3% YoY and down 3.4% QoQ. The consequent margin was at 24.5% (down 40 bps YoY and down 135 bps QoQ). The company attributed the decline in EBITDA to higher expenses which are back ended in nature (also reopening led costs such as admin and travelling expenses, in our view). Data EBITDA margin was at 29.3%, down 290 bps QoQ. Voice segment margins was at 7%, down 80 bps QoQ. FY22 EBITDA margins at 25.3% was up 40 bps YoY

- The company reported a PAT of Rs. 365 crore, up 22% YoY, aided by higher other income which majorly included tax refunds and interest on the same. PAT for the year at Rs. 1482 crore was up 18%, YoY

- There was a sequential decline in net debt by ~Rs. 444 crore QoQ (Rs. 1042 crore for the full year) on the back of a healthy FCF (Rs. 2619 crore for FY22). The Net Debt to annualised EBITDA stood at comfortable levels of 1.6x as compared to 1.7x in Q3FY22

Tata Communication remains a key beneficiary of new normal of hybrid work structure, increased conferencing needs thereof and overall digitisation at enterprise levels. While revenue growth is on recovery trajectory along with continued cash flow generation and debt reduction, margin blip during the quarter, was dampener. We seek management commentary on the growth and margins trajectory ahead. We will soon come up with an update post the conference call.

Shares of Tata Communications Limited was last trading in BSE at Rs. 1281.40 as compared to the previous close of Rs. 1314.85. The total number of shares traded during the day was 47023 in over 2377 trades.

The stock hit an intraday high of Rs. 1325.15 and intraday low of 1277.80. The net turnover during the day was Rs. 60940095.00.

Source : Equity Bulls

Keywords

TataCommunications INE151A01013 Q4FY22 FY2022 ResultUpdate ICICIDirect