Hold Tata Communications, Target Price Rs 1270: ICICI Direct Research

ICICI Direct Research has changed the rating for Tata Communications from Buy to Hold for now. The stock has had a run-up of 22% in the last three months. The brokerage has said that its current target price for Tata Communications is Rs 1270. 

Highlights

  • Tata Communications is a leading global digital ecosystem enabler listed on the Indian stock exchanges.
  • The company is known for offering a wide range of state-of-the-art solutions such as cloud, mobility, communication, collaboration, connected solutions, network, and data centre services.
  • The company recently announced its results for Q2 FY23.

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Tata Communications

Tata Communications is a leading global digital ecosystem enabler listed on the Indian stock exchanges. The company is known for offering a wide range of state-of-the-art solutions such as cloud, mobility, communication, collaboration, connected solutions, network, and data centre services. The company recently announced its results for Q2 FY23. The topline revenues were Rs 4431 crore, up by 6.2% YoY and 2.8% QoQ. EBITDA (earnings before interest tax, depreciation and amortisation) came in at Rs 1130 crore, up by 1.5% YoY and 4.9% QoQ. Tata Communications reported a PAT (profit after tax) of Rs 532 crore, up 25% YoY, aided by the sale of properties and lower taxes.

Rating and Target Price for Tata Communications Along with Growth Triggers

ICICI Direct Research has changed the rating for Tata Communications from Buy to Hold for now. The stock has had a run-up of 22% in the last three months. The brokerage has said that its current target price for Tata Communications is Rs 1270.

In the coming future, the growth triggers for the company's stock will be - a) cloud, edge and security, b) next-generation connectivity, c) NetFoundry , MOVE and IoT, wherein each has robust market size growth potential of 15% to 25% CAGR in next four to five years.

Bharti Airtel is a Good Alternative to Tata Communications

As an alternate stock idea to Tata Communications, ICICI Direct Research said that Bharti Airtel is a good option in the telecom space. For Airtel, the brokerage has set a target price of Rs 860 and given it a buy rating.

According to a report from ICICI Direct Research, released on October 8, 2022, Airtel's ARPU (average revenue per user) figure is expected to go up by 2% QoQ to Rs 187 in Q2 FY23. The telco is expected to report a modest 2 million subscriber addition. Wireless revenues from the Indian market are expected to see 2.5% QoQ growth at Rs 18,621 crore. The Africa business of Airtel is also expected to witness revenue growth of 3.6% QoQ to Rs 10,052 crore, aided by a currency tailwind.

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