- 18 Apr 2024
- ICICI Securities
TATA COMMUNICATION'S WEAK PERFORMANCE ON UNDERLYING BASIS; TAX CREDIT BOOSTS PAT
News: Topline came in at ₹ 5692 crore, up 24.6% YoY & up 1% QoQ, driven by the consolidation of Kaleyra and Switch. The underlying data revenues was muted at ~4.8% YoY (0.4% QoQ) at ₹ 3845 crore. The underlying Digital Platforms segment of Data business witnessed growth of 4.8% YoY and was down 3.1% QoQ at ₹1271. The reported digital platform segment saw a growth of 80% YoY owing to Kaleyra (₹ 825 crore revenues in Q4) and Switch impact. Voice segment continued to remain weak with revenues down 7.2% YoY at ₹ 429 crore. Consolidated EBITDA came in at ₹ 1056 crore, up 2.1% YoY with margin at 18.6% (down 408 bps YoY and down 158 bps QoQ). The underlying EBITDA was flat YoY at ₹ 1037 crore with margin of 21.9%, up 20 bps QoQ, down 70 bps YoY. Underlying Data EBITDA margin, which was at 24.4%, up 40 bps YoY, and flat QoQ. PAT at ₹ 321 crore was down 1% YoY aided by tax credit of ₹ 249 crore. There was a sequential decline in net debt by ~₹ 184 crore to ₹ 9126 crore.
Views: While revenue growth is visible on reported basis, the underlying revenue growth has further tapered to sub 5%, alongwith margin weakness. Tata Communication remains a key beneficiary of overall digitisation at enterprise levels, albeit continues to disappoint as growth-margin construct is not in sync.
Impact: Negative