Tata Communications Q2 Results: Net Profit Falls 32%, Misses Estimates

Tata Communications Ltd. reported a 32% quarter-on-quarter fall in net profit for the second quarter of this financial year, missing analyst estimates.

The telecommunication firm recorded a consolidated net profit of Rs 227.27 crore for the quarter ended September, compared to Rs 333 crore in the previous quarter, according to its stock exchange notification. This was above the Rs 271 crore estimate by analysts tracked by Bloomberg.

Revenue increased by 2% quarter-on-quarter for the three months ended September, reaching Rs 5,767 crore. Analysts had projected revenue of Rs 5,777 crore.

Operating income, or earnings before interest, taxes, depreciation, and amortisation, 0.6% year-on-year to Rs 1,116 crore. The Ebitda margin contracted to 19.4% from 19.9% in the previous quarter. Analyst estimates for Ebitda and Ebitda margin tracked by Bloomberg were Rs 647 crore and 16.20%, respectively.

"Our order book has expanded with some key strategic wins across markets. The adoption of our Digital Fabric (Network, Cloud and Security, Interaction and IoT) by enterprises continues to drive our optimism about future growth,” said A.S. Lakshminarayanan, managing director and chief executive officer, Tata Communications.

The company in September announced a restructuring initiative aimed at moving its wholly owned subsidiary, Tata Communications (UK) Ltd., under its direct ownership.

The shares of Tata Communications were trading lower on Thursday. The shares fell as much as 5.22% during the day to Rs 1,822.05 apiece on the NSE. The stock was trading 4.62% lower at Rs 1,833 per share as of 3:15 p.m. This compares with a 0.87% decline in the benchmark Nifty 50. It has risen 2.57% in the last 12 months and 3.85% year-to-date.

Out of seven analysts tracking the company, four maintain a 'buy' rating, two recommend a 'hold,' and one suggests 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 11%.