Tata Communications
BSE SENSEX
51,942
S&P CNX
15,635
10 June 2021
Company Update | Sector: Telecom
CMP: INR1231
TP: INR1142 (-7%)
Neutral
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Ambitious targets, but needs to tread carefully
TCOM’s analyst webinar provided a detailed deep-dive into the global
enterprise growth opportunity, management’s growth focus, margin outlook,
and investment requirements. Key insights are:
Strong focus on growth
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
TCOM IN
285
350.8 / 4.8
1365 / 447
8/7/112
389
41.1
Financials and valuations (INR b)
Y/E March
FY21 FY22E FY23E
Net Sales
171.0 174.2 192.1
EBITDA
42.6
45.2
51.5
Adj. PAT
13.3
14.4
19.0
EBITDA Margin (%)
24.9
25.9
26.8
Adj. EPS (INR)
46.5
50.6
66.7
EPS Gr. (%)
340.2
8.8
31.9
BV/Sh. (INR)
4.1
54.7 121.4
Ratios
Net D:E
57.5
2.8
0.5
RoE (%)
-227.9 172.4
75.8
RoCE (%)
19.5
16.4
18.6
Payout (%)
10.6
9.2
7.0
Valuations
EV/EBITDA (x)
10.3
9.2
7.6
P/E (x)
26.3
24.2
18.3
P/BV (x)
302.1
22.4
10.1
Div. Yield (%)
0.3
0.3
0.3
FCF Yield (%)
4.4
6.4
7.5
Shareholding pattern (%)
As On
Mar-21 Dec-20
Promoter
58.9
75.0
DII
7.5
1.4
FII
24.4
17.7
Others
9.2
6.0
FII Includes depository receipts
Mar-20
75.0
1.8
17.5
5.8
TCOM’s achieved its double-digit EBITDA growth target last year, despite
weak low single-digit Data revenue growth, thanks to margin
improvement due to an impact of COVID-19 on revenue. The
management reiterated its renewed growth focus, with a medium term
double-digit Data revenue growth target, on the back of three key
factors: a) a shift to platform from a product-based approach for Next-
Gen Connectivity, Collaboration, and Cloud and Hosting business; b)
strong focus towards the engagement program for its top 1,000
customers and account planning; and c) positioning as a digital
ecosystem enabler, with a revamped operating structure for a greater
business focus. It has managed to leverage the global shift towards digital
by moving towards platform-based delivery.
Products to platform approach to leverage growth opportunity in
global enterprise data
Despite the weak industry growth outlook in its traditional Core
Connectivity segment, with declining market size (-2% CAGR), the
management’s target of double-digit Data growth stems from its focus
toward new growth areas like: a) Next-Gen Connectivity, with on demand
connectivity solutions, IZO platform, and integrated WAN management,
where the market is expected to grow at 15% CAGR over FY20-24; b)
Collaboration and Connected Solutions, which is expected to see steady
industry growth of 15-25%; and c) Cloud Hosting and Security business,
given the huge demand for multi-Cloud adoption, with 24% market
growth over FY20-25, TCOM’s innovative IaaS/PaaS offerings, and trends
of vendor consolidation towards an integrated provider of Cloud +
Security + Network Services.
Targets double-digit revenue growth, with 23-25% margin; capex
may go up
Stock Performance (1-year)
Tata Comm
Sensex - Rebased
1,450
1,100
750
400
While near-term Data revenue growth trends remain challenging, with
the impact of COVID-19 on usage-based sectors like Media and Aviation
seeing weak growth and the second COVID wave taking a severe toll both
internally and externally, the management is still relying on growing its
new order funnel, innovative solutions, and strong market demand
towards digitization and new solutions. Yet we see two key challenges.
a.) Until new product categories in the Innovation segment achieve scale
of over 10x from a current revenue base of a mere INR1.3b, it may
continue to lag along with a weak growth outlook in its subsidiaries.
Aliasgar Shakir - Research Analyst
(Aliasgar.Shakir@motilaloswal.com)
Suhel Shaikh
-
Research Analyst
(Suhel.Ahmad@MotilalOswal.com)
3 September 2019
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
1
 Motilal Oswal Financial Services
Tata Communications
Hence, the management has kept its margin guidance at 23-25%, despite already
being at 24.9% in FY21. b.) It plans to maintain leverage at current levels, despite a
strong FCF, as is looking at increasing capex or exploring inorganic opportunities to
front load the investment cycle in the near term, even before it sees it translating in
a meaningful Data revenue growth rate. The increase in RoCE target to 25-30% in
the medium term underscores the management’s consciousness towards right
investments. But given its past record of high capital investment in multiple non-
core areas like Neotel (South African market) and the ATM business, we see risk to
FCF generation.
Key highlights from the analyst webinar
The management displayed increased vigor and reiterated double-digit Data
growth
in the near term, despite weak FY21 earnings. It guided at an EBITDA
margin of 23-25%, though COVID-related growth headwinds continue to linger
in the near term.
RoCE target revised upward
to 25-30% from 20% earlier. The same stood at
25% in FY21 v/s 11.5% in FY20. Near term capex intensity and higher investment
in organic/inorganic avenues to fuel growth.
Leverage to remain at current levels,
despite higher growth, due to the use of
cash flows to fund additional capacity. The company faced headwinds during the
2HFY21 from impacted segments like Media and Aviation, which will see a slow
recovery in FY22.
Valuation
The stock has risen over 2.5x in the last one year. At our estimated EBITDA CAGR
of 9.9% over FY21-23E, the stock is trading at FY23E EV/EBITDA of 7.6x, with a
limited margin of safety.
Its performance in the last couple of years has been commendable, with EBITDA
growing to INR42.6b in FY21 from INR32.9b in FY20, thanks to 565bp margin
improvement. But with a limited potential for margin improvement, near-term
growth headwinds, and an increase in investment possibilities, earning growth
and FCF generation could moderate over FY21-23E.
We maintain our cautious stance on TCOM and would keenly watch execution
of its stated strategies to drive healthy revenue/EBITDA growth with new
product portfolios.
We value TCOM at INR1,142 using SoTP valuation and assign a 7.8x/2.5x
multiple to FY23E Data/Voice EBITDA. Maintain Neutral.
10 June 2021
2
 Motilal Oswal Financial Services
Tata Communications
Exhibit 1: Valuation based on pre Ind AS 116 FY23E EBITDA
Particulars
EBITDA (INR m)
Multiple (x)
Voice EBITDA (INR m)
Multiple (x)
Data EBITDA (INR m)
Multiple (x)
Enterprise Value (INR m)
Net Debt (INR m)
Equity value (INR m)
No. of shares (m)
Equity value/share (INR)
Upside/(Downside)
Land Bank (INR)
Fair Value (INR)
CMP (INR)
Upside/(Downside)
FY23E
51,455
7.6
1,070
3
50,386
8
3,93,162
67,666
3,25,496
285
1,142
-8%
176
1,318
1242
-8%
Source: MOFSL, Company
10 June 2021
3
 Motilal Oswal Financial Services
Tata Communications
Key highlights from the analyst webinar
Key highlights
The management displayed increased vigor and reiterated double-digit Data
growth
in the near term, despite weak FY21 earnings. It guided at an EBITDA
margin of 23-25%, though COVID-related growth headwinds continue to linger
in the near term.
RoCE target revised upward
to 25-30% from 20% earlier. The same stood at
25% in FY21 v/s 11.5% in FY20. Near term capex intensity and higher investment
in organic/inorganic avenues to fuel growth.
Leverage
to remain at current levels,
despite higher growth, due to the use of
cash flows to fund additional capacity. The company faced headwinds during the
2HFY21 from impacted segments like Media and Aviation, which will see a slow
recovery in FY22.
Financial performance
Margin:
TCOM is currently operating at the upper end of its margin guidance
(24.9% in FY21). This was mainly aided by COVID-related cost reduction. Going
forward, the management expects some costs to return as the situation
improves and travel resumes.
Debt:
At the end of FY21, net debt-to-EBITDA ratio stands at an optimum level
of 1.7x. The company does not intend to pay down its debt from current levels.
Improved FCF to be invested to fuel growth:
FCF improved to INR28.34b in
FY21 from INR7.72b in FY17. The same is expected to be invested back in the
form of organic and inorganic growth, thereby filling up portfolio gaps.
Change in reporting structure:
Going forward, the company will now report three business segments:
Data:
This will comprise Core Connectivity, Digital Platforms and Services, and
Incubation.
Voice:
This will comprise ILD and NLD.
Subsidiaries and others:
This will comprise other businesses such as Network
Transformation, White Label ATMs, and rental income.
Traditional/Growth Services will be renamed as Core Connectivity/Digital
Platforms and Services.
Core Connectivity segment:
Future growth
in this segment will be driven by Next-Gen Connectivity and
Cloud services, where TCOM has a strong product portfolio, IZO Platform, and
bandwidth on demand. This allows the customer to remain agile for growth. The
company expects single-digit growth in this segment to continue.
Next-Gen Connectivity to drive market share growth:
Growth in market size
within this segment is expected to be driven by strong growth in Next-Gen
Connectivity, which is expected to grow by 14.5% CAGR over FY20-24 to
USD18b.
Key strengths:
Comprehensive coverage of hybrid IZO solution, unified service
experience, on demand connectivity, and integrated WAN management will be
key strengths within this segment.
10 June 2021
4
 Motilal Oswal Financial Services
Tata Communications
Collaboration and Connected Solution segment:
Growing market:
Growth for each sub-segment is expected to be as follows:
Collaboration:
Expected to grow by 13.6% CAGR over FY20-24 to USD44b.
CPaaS:
Expected to grow by 16.5% CAGR over FY20-24 to USD24b.
MOVE:
Expected to grow by 26.1% CAGR over FY20-24 to USD21b.
India IoT Solutions:
Expected to grow by 19.8% CAGR over FY20-24 to USD7b.
Unified Collaboration as A Service:
Within this segment, TCOM provides a
product platform and robust security. So, the customer can grow by using this
product instead of undertaking captive investments, thus allowing it to remain
agile.
Cloud, Hosting, Security, and SD-WAN segment:
Growing market:
The market size for Cloud and Hosting is expected to grow by
24% CAGR over FY20-24 to USD6.8b. Similarly, Managed Security Services, which
is a USD11.4b market, is expected to grow at 8.1% to USD15.5b over FY20-24.
Cloud adoption and demand for secure network transformation to drive
growth:
TCOM provides Cloud and managed Hosting, with a multi-Cloud
platform – private and public – hosting to enable Cloud adoption. The need for
security has increased due to digital transformation and work from home. TCOM
offers Managed Security Solutions, which enables protection, detection, and
responsiveness. It also offers an SD-WAC platform, which provides agility,
performance, security, and visibility to a customer’s network.
Sales and marketing:
Mastering ‘deeper with fewer’:
TCOM follows a deeply segmented horizontal
market approach, with a primary focus on the top 300 customers using the ‘Top
300, Next 700’ program. For larger deals, the company plans to create a war
room. It plans to transform its sales engine to enable top-class analytics and
track the funnel addition to reap the benefits of its aggressive growth
philosophy.
Improved NPS trends over the year:
TCOM has witnessed an improvement in
NPS trends over the years. This displays a higher customer engagement and also
ensures the ability of the company to improve wallet size of existing customers.
Financial targets
Profitability:
TCOM is looking at achieving double-digit Data revenue growth,
along with a narrowed down EBITDA margin guidance of 23-25%. Despite
clocking EBITDA at the higher end of the band in FY21, the management expects
EBITDA margin in the near term to decline as costs related to business and travel
goes up as the impact of COVID-19 minimizes.
RoCE:
The management has revised its medium term RoCE target to 25%-30%
from 20%.
Net debt to sustain:
TCOM is looking to maintain net debt at current levels.
10 June 2021
5
 Motilal Oswal Financial Services
Tata Communications
Outlook
Capex:
TCOM’s current capex guidance of USD250m may increase depending on
growth initiatives. The management remains committed to growth through
organic and inorganic avenues.
Broadening India market reach:
TCOM plans to improve its reach in the Indian
market by targeting ~5,000 mid-market enterprises using the Physical + Digital
model.
Headwinds from impacted sectors:
Lingering impact of COVID-19 may continue
in coming quarters. This will majorly come from impacted sectors like Media and
Aviation, which are showing slow signs of a recovery. Slowness in conversion is
expected to continue.
10 June 2021
6
 Motilal Oswal Financial Services
Tata Communications
Key exhibits
Exhibit 2: Market size of Next-Gen Connectivity (USD b)
Exhibit 3: Market size of Core Connectivity (USD b)
18
11
136
132
2020
2024
2020
2024
Exhibit 4: Market size of Collaboration and Connected
Solutions (USD b)
India IOT
MOVE
CPaas
Collaboration
7
21
3
8
13
26
2020
24
44
2024
Exhibit 5: Market size of Cloud and Hosting and Managed
Security Services (USD b)
Managed Security Services
Cloud and hosting
15.5
11.4
3
2020
6.8
2024
Exhibit 5: Estimate Voice revenue at 19% CAGR over FY21-
23E
8
Voice Revenue (INR b)
9
9
7
6
6
6
EBITDA margin (%)
9
8
6
6
6
Exhibit 6: Expect Data revenue at 10% CAGR over FY21-23E
Data Revenue (INR b)
EBITDA margin (%)
29
22
17
19
20
21
18
18
19
22
29
29
68
86
93
88
81
68
53
39
34
28
21
18
56
68
81
90 106 109 115 127 137 143 153 174
Exhibit 7: Trend in Data segment EBITDA, capex, and FCF (INR m)
75000
50000
25000
0
-25000
EBITDA (LHS)
Capex in data segment (LHS)
FCF (RHS)
50,000
35,000
20,000
5,000
-10,000
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22E
FY23E
Source: MOFSL, Company
10 June 2021
7
 Motilal Oswal Financial Services
Tata Communications
Financials and valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Network Cost
Staff Cost
Operating & Other Expense
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Minority Interest
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22E
FY23E
1,99,090 1,81,486 1,76,197 1,67,717 1,65,250 1,70,680 1,71,001 1,74,211 1,92,097
1.5
-8.8
-2.9
-4.8
-1.5
3.3
0.2
1.9
10.3
1,05,543
96,724
88,119
79,032
71,620
67,776
63,333
59,486
65,536
27,948
27,396
28,394
29,775
29,597
30,391
30,491
31,312
32,894
35,702
32,949
35,625
34,787
36,584
39,623
34,572
38,219
42,176
1,69,193 1,57,069 1,52,138 1,43,595 1,37,801 1,37,790 1,28,395 1,29,017 1,40,605
85.0
86.5
86.3
85.6
83.4
80.7
75.1
74.1
73.2
29,897
24,417
24,059
24,122
27,449
32,890
42,606
45,194
51,492
15.0
13.5
13.7
14.4
16.6
19.3
24.9
25.9
26.8
21,611
18,643
18,658
19,063
20,676
23,577
23,139
23,263
23,976
8,286
5,774
5,401
5,059
6,773
9,312
19,467
21,931
27,516
7,508
4,091
3,672
3,445
3,966
4,707
4,202
3,601
3,337
4,008
3,966
3,603
2,597
603
697
1,568
986
1,282
4,786
5,650
5,332
4,211
3,410
5,302
16,833
19,316
25,461
-1,052
-1,028 -10,633
-3,755
22
-3,905
-747
0
0
3,734
4,622
-5,301
456
3,432
1,397
16,085
19,316
25,461
3,705
2,329
2,364
3,549
2,733
2,267
3,549
4,862
6,409
99.2
50.4
-44.6
778.2
79.6
162.3
22.1
25.2
25.2
17
18
-25
193
1,523
-11
30
30
30
13
2,276
-7,640
-3,286
-824
-860
12,506
14,424
19,022
3,027
973
3,016
331
-624
3,011
13,253
14,424
19,022
-43.2
-67.9
210.0
-89.0
-288.6
-582.2
340.2
8.8
31.9
1.5
0.5
1.7
0.2
-0.4
1.8
7.8
8.3
9.9
(INR M)
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Total Loans
Lease liabilities
Deferred Tax Liabilities
Capital Employed
FY15
FY16
2,850
2,850
365
-6,484
3,215
-3,634
59
69
1,30,757 1,51,181
FY17
2,850
13,069
15,919
184
99,516
-2,015
-1,072
71
1,32,015 1,46,545 1,15,690
FY20
FY21
FY22E
FY23E
2,850
2,850
2,850
2,850
-15,634
-1,695
12,728
31,751
-12,784
1,155
15,578
34,601
48
282
282
282
81,575
98,011
94,501
87,071
39,938
14,351
14,351
14,351
-477
-887
-2,495
-2,824
-2,824
-2,824
99,956 1,04,196 1,06,282 1,10,975 1,21,888 1,33,480
FY18
FY19
2,850
2,850
2,143
-4,668
4,993
-1,818
45
58
95,395 1,06,844
(INR M)
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Right to use assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Appl. of Funds
E: MOSL Estimates
2,99,608 3,08,467 2,70,923 2,88,666 1,16,569 1,29,126 1,51,316 1,61,103 1,79,188
1,56,419 1,67,208 1,61,638 1,80,701
5,006
28,583
51,722
74,985
98,961
1,43,190 1,41,259 1,09,285 1,07,965 1,11,563 1,00,543
99,594
86,118
80,227
15,956
13,337
13,337
13,337
3,848
3,246
0
0
863
918
1,103
1,103
1,103
6,383
7,998
7,509
5,203
4,082
4,466
6,091
6,091
6,091
17,675
18,306
24,340
12,502
14,913
15,631
22,334
22,334
22,334
68,841
79,095
69,199
264
254
192
24,870
30,189
25,900
16,212
19,763
10,793
27,495
28,889
32,313
1,07,922 1,03,359
94,643
36,697
35,764
35,814
61,538
61,748
53,142
9,687
5,847
5,687
-39,081 -24,264 -25,444
1,32,015 1,46,545 1,15,690
69,425
67,205
72,016
67,773
90,750 1,13,016
270
766
730
344
547
603
28,912
29,685
32,289
26,077
28,637
31,578
12,956
8,521
9,091
9,271
28,362
46,505
27,288
28,234
29,906
32,081
33,204
34,331
95,139
94,429 1,03,248
99,257
97,845 1,02,627
34,716
36,885
38,450
32,395
32,933
34,209
54,759
51,527
57,252
59,981
60,616
63,682
5,664
6,016
7,546
6,881
4,296
4,737
-25,714 -27,224 -31,232 -31,484
-7,095
10,389
99,956 1,04,196 1,06,282 1,10,975 1,21,888 1,33,480
10 June 2021
8
 Motilal Oswal Financial Services
Tata Communications
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Net Debt/Equity
FY15
10.6
86.4
11.3
5.5
13,711.6
115.2
14.2
108.5
2.3
15.5
0.4
44.1
54.0
0.1
0.1
0.7
1.5
0
46
67
0.6
1.1
30.1
FY16
3.4
68.8
-12.7
4.3
64.2
358.5
17.8
-96.0
2.6
19.7
0.4
11.7
-464.6
3.4
3.0
0.6
1.2
1
61
72
0.8
1.4
-31.1
FY17
10.6
76.0
55.9
6.0
-25.0
115.6
16.1
21.9
2.5
18.2
0.5
21.0
49.1
9.9
9.0
0.7
1.5
0
54
74
0.7
1.5
4.0
FY18
1.2
68.0
17.5
4.5
-45.4
1,053.4
18.0
69.9
2.6
17.9
0.4
-8.4
3.2
3.8
2.1
0.6
1.7
1
63
76
0.7
1.5
14.0
FY19
-2.2
70.4
-6.4
4.5
-181.0
-558.6
17.4
-191.8
2.7
16.3
0.4
-27.1
-39.3
1.5
1.9
1.4
1.6
2
66
81
0.7
1.7
-45.9
FY20
10.6
93.3
-44.9
4.0
-154.2
115.8
13.1
-27.3
2.5
12.8
0.3
36.5
-41.2
-7.2
-7.5
1.3
1.6
2
69
82
0.7
2.0
-4.4
FY21
46.5
127.7
4.1
4.0
10.6
26.3
9.6
302.1
2.6
10.3
0.3
64.5
-227.9
19.5
20.2
1.1
1.5
1
56
69
0.7
4.6
57.5
FY22E
50.6
132.2
54.7
4.0
9.2
24.2
9.3
22.4
2.4
9.2
0.3
88.6
172.4
16.4
23.7
1.1
1.4
1
60
69
0.9
6.1
2.8
FY23E
66.7
150.9
121.4
4.0
7.0
18.3
8.1
10.1
2.0
7.6
0.3
97.0
75.8
18.6
33.3
1.1
1.4
1
60
65
1.1
8.2
0.5
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY15
3,734
21,611
6,680
-1,120
-1,339
29,565
718
30,283
-17,713
12,570
-1,720
2,550
-16,884
0
-5,088
-6,285
-1,467
-1,043
-13,883
-483
16,695
16,211
FY16
2,626
22,194
7,151
-4,238
-4,432
23,301
326
23,627
-20,287
3,340
-3,084
3,409
-19,963
0
7,602
-5,807
-1,873
-34
-113
3,551
16,211
19,763
FY17
20,188
19,469
6,875
-7,404
-227
38,900
-14,965
23,935
-17,952
5,983
7,815
10,023
-114
0
-28,219
-3,086
-1,424
-62
-32,791
-8,970
19,763
10,793
FY18
456
19,063
3,445
-3,549
2,433
21,847
-8,796
13,051
-15,437
-2,386
11,838
2,597
-1,003
0
-4,121
-3,445
-1,988
-332
-9,885
2,163
10,793
12,956
FY19
3,432
20,676
3,966
-2,733
-3,335
22,005
-6,577
15,428
-23,152
-7,724
-2,411
-260
-25,823
0
11,448
-3,966
0
-1,523
5,960
-4,435
12,956
8,521
FY20
-848
23,577
4,707
-2,793
-2,513
22,131
3,117
25,248
-14,856
10,392
-491
49
-15,298
0
-4,044
-3,850
-1,508
23
-9,379
571
8,521
9,091
FY21
12,515
23,139
4,202
-4,964
-5,526
29,366
2,433
31,798
-13,428
18,371
-6,916
298
-20,046
0
-8,381
-2,515
-1,140
463
-11,573
180
9,091
9,271
FY22E
19,316
23,263
3,601
-4,862
-5,298
36,020
-986
35,035
-9,787
25,248
0
986
-8,801
0
-3,511
-3,601
0
-30
-7,142
19,091
9,271
28,362
(INR M)
FY23E
25,461
23,976
3,337
-6,409
659
47,025
-1,282
45,743
-18,085
27,658
0
1,282
-16,803
0
-7,430
-3,337
0
-30
-10,797
18,143
28,362
46,505
10 June 2021
9
 Motilal Oswal Financial Services
Tata Communications
NOTES
10 June 2021
10
 Motilal Oswal Financial Services
Tata Communications
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
< - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30
days take appropriate measures to make the recommendation consistent with the investment rating legend.
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Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,
is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary
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India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its
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products.
Details
of
associate
entities
of
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Oswal
Financial
Services
Limited
are
available
on
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at
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some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware
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is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to
professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer
or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state
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Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by
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defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on
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interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a
chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be
executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered
broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading
securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services
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Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
10 June 2021
11
 Motilal Oswal Financial Services
Tata Communications
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific
recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there
might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider
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considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research
analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and
the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform
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already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or
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The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not
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costs, damages,
expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai-
400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI:
ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration
No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.:
INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond,
NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered
through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk
Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk,
read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law
Tribunal, Mumbai Bench.
-
10 June 2021
12