MOSL: TATA COMMUNICATIONS (Buy)-Expect steady EBITDA growth, RoIC improvement
​Tata Communications: Expect steady EBITDA growth, RoIC improvement; Normalized data EBITDA up 5% QoQ
(TCOM IN, Mkt Cap USD3.0b, CMP INR705, TP INR811, 15% Upside, Buy)
Ex data center and one-offs, core EBITDA up 9% QoQ
- During the quarter, four factors impacted the data segment: (1) sale of data center business, (2) one-off expenditure of INR1b, (3) unfavorable ruling of the High Court on TRAI’s AFC (access facilitation charges) regulations, and (4) impact of demonetization on the ATM business.
- Normalized core revenue declined 2% QoQ to INR43.2b (our estimate was INR44.5b) due to sluggish voice revenue. Normalized data revenue grew 2.3% to INR28.2b (in-line), led by 6% and 12% jump in transformation and growth segment.
- Normalized core EBITDA grew 9% QoQ to INR7b (our estimate was INR6.25b). Voice EBITDA grew 30% QoQ to INR1.1b. Normalized data EBITDA grew 4.7% to INR5.85b. Data EBITDA margin jumped 50bp QoQ to 20.8%.
Tata Communications is a provider of communications. Co. delivers managed solutions to multi-national enterprises, service providers, service providers and Indian consumers. Co. offers international and national voice and data transmission services, selling and leasing of bandwidth on undersea cable systems, Internet dial up and broadband services, and other services comprised mainly of mobile global roaming and signaling services, transponder lease, data centers, telex and telegraph and television uplinking. Co. operates in the following three segments: Global Voice Solutions, Global Data and Managed Services and South African Operations.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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