Not TCS, Tata Steel Or Tata Motors, But This Tata Telecom Stock To Fetch 7% Gains In 5-15 Days

One Tata Group-backed stock is a hot bet for short-term gains. This one is not as popular as flagship TCS, steel giant Tata Seel, or auto player Tata Motors. Instead, the Group's telecom company, Tata Communications is recommended to buy for over 7% gains in 5 days to 15 days. Axis Securities sets a target price of Rs 1,939 apiece.

In its short-term investment ideas, Axis Securities recommends the following for Tata Communications:

- Entry Price Range: BUY Tata Communications share price in the range of Rs 1,785 to Rs 1,806.

- Stop Loss is suggested at Rs 1,777.

The target price is set at Rs 1,939 on Tata Communication.

- Potential Upside is 7.07% in 5-15 days.

On February 16, Tata Communications' share price ended at Rs1,810.95 apiece, up by 3.25% on BSE with a market cap of Rs 51,612.08 crore,

In Q3FY24, Tata Communications posted quarterly revenue of Rs 5,633 crore (USD 677.1 Mn) - up 24.4% YoY - backed by strong performance in Data Revenue. While its data revenue came in at Rs 4,618 crore (USD 555.1 Mn), a rise of 28.5% YoY. Further, the company's digital portfolio revenue grew by 78.2% YoY, contributing ~45% to the Data portfolio. Also, consolidated EBITDA stood at Rs 1,134 crore (USD 136.3 Mn), improving by 5.3% YoY and 11.7% QoQ.

However, Tata Communications' PAT dropped by 88.6% to Rs 45 crore in Q3FY24 versus Rs 394 crore in Q3FY24. Adjusted PAT declined by 36.2% YoY.

Post Q3 results, last month, for the long term basis, Emkay Global in its report said, "The company's initiatives like (i) moving Kaleyra, DIGO, and InstaCC into one customer interaction suite; (ii) Switch and TCom's media being led by one business leader; (iii) Combining capabilities of Switch and EMEA business to capture the incremental opportunities; (iv) Project management team to track various milestones in the integration can help drive scale and synergies. Revenue growth is expected to be led by the digital platform and services (39% CAGR over FY23-26E), which can also benefit from the acquisitions of Switch and Kaleyra. We see the share of digital revenue in data revenue increasing to 52% in FY26 from 45% currently."

Emkay added, "With synergy and operating leverage benefits, the margin can recover to 23.5% by the end of FY26. We expect revenue/EBITDA to register a 14.6%/13.4% CAGR over FY23-26E. We increased our FY24-FY26 margin by 30-70bps on margin beat. Our TP increases to Rs2,000/share (10.5x Dec-25E EBITDA) from Rs1,900 earlier. We retain our ADD rating."

Recently, Tata Communications also partnered with JLR to future-proof its digital transformation and pave the way for new standards such as Industry 4.0 and advanced analytics. The partnership will power the production of JLR's next-generation vehicles, a key part of its Reimagine strategy, and provide the connectivity foundation for the next phase of digital transformation for the organisation.

A part of the Tata Group, Tata Communications is a global digital ecosystem enabler powering today's fast-growing digital economy in more than 190 countries and territories. Leading with trust, it enables the digital transformation of enterprises globally with collaboration and connected solutions, core and next-gen connectivity, cloud hosting and security solutions and media services.