Not Tata Steel Or Tata Motors, But Tata's Midcap Stock May Rise By 16%, Rs 2,000 TP; Rs 16.70/Sh Dividend Soon

Tata Group stocks are in appeal, and this time there is a buy rating on its one stock. It's neither the large-caps like Tata Steel, Tata Motors, or TCS, but instead, Prabhudas Lilladher likes Tata-backed midcap stock in the telecom sector aka Tata Communications. Unlike three large-caps, Tata Communications has witnessed consolidation with YTD performance down by 3% on BSE.

Unlike the midcaps, Tata's large stocks have widely been on a bull trend YTD, with significant upsides such as Tata Steel gaining by 16%, Tata Motors up by 30%, and Tata Consultancy Services (TCS) surging by 4% despite the challenging environment in the IT sector. Amidst such a scenario, Tata's midcaps are back to being attractive with the potential of double-digit returns ahead.

If you're looking for a piece of Tata stocks then Tata Communications is appealing with a potential upside of 16% in the near term. Prabhudas has set a target of Rs 2,000, compared to the stock's latest price levels below Rs 1,720. Notably, Tata Communications is undervalued!

Tata Communications Share Price:

On May 9th, Tata Communications' share price stood at Rs 1726.20 apiece, down by 1.62% with a market cap of Rs 49,196.70 crore. The stock's 52-week high and low are at Rs 2,085 and Rs 1,209.95 apiece respectively.

YTD, Tata Communications is down by 2.7%, while in a year, the stock tumbled by 35%. In 5 years, the stock rallied by 312%, becoming a multi-bagger.

However, as per Trendlyne data, the stock is underperforming its sector by 34.3% in a year.

Buy Tata Communications Share Price:

In its research note, brokerage Prabhudas Lilladher said, "The stock has witnessed a decent erosion on the daily chart since the peak zone of 2084 levels and recently has shown signs of bottoming out near the 1700 zone after a short consolidation."

The brokerage added that there is resistance near the 200DMA zone of 1790, which needs to be breached decisively for confirmation of a further upward move. The RSI is well-placed and is on the rise, with the potential to rise further in the coming days.

Accordingly, Prabhudas suggested buying and accumulating this stock for an upside target of 2000, keeping the stop loss near the 1650 level.

Tata Communications Earnings:

In Q4FY24, the company's consolidated PAT stood at Rs 321 crore, down by 1.5%, however, gross revenue stood at Rs 5,692 crore, up by 24.6%. EBITDA climbed marginally by 2.1% to Rs 1,056 crore, with EBITDA margin at 18.6%.

Notably, in FY24, the company touched a new milestone by crossing Rs 20,000 crore mark in revenue. In FY24, Tata Communications consolidated revenue jumped 17.5%, coming in at Rs 20,969 crore. On the other hand, PAT dipped by a massive 46.1% to Rs 968 crore.

AS Lakshminarayanan, MD and CEO, of Tata Communications, said: "We are pleased to report the significant revenue milestone of INR 20,000 crore. We closed FY24 with strong execution and our digital fabric is witnessing increased relevance from enterprise customers. As we enter the next fiscal, our firm focus will remain on integrating our acquisitions, executing our strategies, and driving sustainable and profitable revenue growth."

Tata Communications Dividend:

This telecom giant is set to reward investors with a final dividend of Rs 16.70 per share for FY24.

As per the regulatory filing, the company has recommended a final dividend of Rs 16.70 per share (face value of Rs 10 each) for the financial year ending March 31, 2024. This dividend, upon approval of the shareholders at the ensuing Annual General Meeting (AGM), shall be paid to eligible shareholders after its conclusion.

In FY23, the company paid dividends up to Rs 21 per share or 210%.

Currently, Tata Communications has a dividend yield of 0.97%.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.