This Tata Group Stock Is An “Add” For Good Returns, Says Yes Securities

Yes Securities has recommended adding the stock of Tata Communication for an upside target of Rs 1426. According to the brokerage Tata Communication reported mixed performance for the quarter. Both, the sequential revenue growth and EBITDA margin were slightly below estimates. It reported sequential revenue growth of 0.9% QoQ, led by increase in the revenue of Digital Platforms and Services by 2.3% QoQ.

Tata Communication: Voice revenue declines

Voice revenue declined by 8.7% QoQ; while data revenue increased by 2.1% QoQ. There was sequential decline in EBITDA margin(down 115 bps QoQ) led by increase in employee cost. Net debt (as of 31st Mar 2023) decreased by Rs 5.6 billion QoQ to Rs 57 billion. Data portfolio grew by 10.3% YoY inline with expectation.

"We expect the voice business to continue to decline as per the industry trend; while Data segment would continue to drive the overall performance of the company. Private 5G related capex going ahead should also drive opportunities for the company. We expect EBITDA margin to stay in guided band of 23%-25% going ahead. We estimate revenue CAGR of 10.2% over FY23‐25E with average EBITDA margin of 24.3%. We maintain our ADD rating on the stock with revised target price of Rs 1,426/share based on EV/EBITDA of 8.5x on FY25E. The stock trades at EV/EBITDA of 8.7x/7.2x on FY24E/FY25E," the brokerage has said.

The stock of Tata Communication was last seen trading at Rs 1241.

Disclaimer
The above mentioned information is purely informational and highlights the stock recommended by Yes Securities. Greynium Information Technologies, the Author and the brokerage firm are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.