Earnings Outlook
Slow sales growth, high base to hit Tata Comm's Q1 PAT
This story was originally published at 20:23 IST on 15 July 2025
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MUMBAI – Tata Communications Ltd. is expected to report subdued earnings for the June quarter, with its bottom line expected to make the second-highest sequential drop in at least four years owing to a high base in the December quarter. Its top line, on the other hand, is expected to grow on a sequential basis, though only in low single digit. The company has been reporting low single-digit sequential growth in its top line for the past three quarters.
The telecommunications company's consolidated net profit for the June quarter is expected to decline by a steep 72% sequentially and nearly 12% on year to INR 2.94 billion, according to the average of estimates from five brokerages. JM Financial Institutional Securities Pvt. Ltd. has the highest estimate of INR 3.20 billion for net profit and Nuvama Wealth Management Ltd. has the lowest estimate of INR 2.63 billion.
During the previous quarter, the company reported a fourfold jump in its bottom line to INR 10.40 billion, boosted by a one-time income of INR 5.78 billion. The one-time income was net proceeds of INR 6.60 billion from the sale of its properties, including one at Ambattur, Chennai, after accounting for an expense of INR 820.5 million on account of staff cost optimisation.
Its consolidated revenue for the latest quarter is expected to grow a little over a percent on quarter to INR 60.66 billion, according to the average of estimates. On a year-on-year basis, this would mean a rise of nearly 8%. This will mark the fourth consecutive quarter of sequential growth in revenue for the company. Centrum Broking Ltd. has the highest estimate of INR 61.44 billion for net sales and Kotak Institutional Equities has the lowest estimate of INR 59.79 billion.
Motilal Oswal expects revenue from the company's largest segment, data services, to rise 1% on quarter, driven by continued momentum in the digital platform and connected services segment. Kotak, on the other hand, expects data services revenue to remain flat on quarter with improvement in core connectivity revenue being offset by a decline in revenue from the digital platforms and connected services segments. Revenue from its voice solutions business is expected to continue to decline sequentially in the June quarter, Centrum Broking said.
The consolidated earnings before interest, tax, depreciation, and amortisation of the company is expected to rise over 3% both sequentially and on a year-on-year basis to INR 11.61 billion. Estimates for EBITDA range from INR 11.36 billion from Kotak to INR 11.80 billion from Motilal Oswal. Its EBITDA margin for the latest quarter is expected to improve by 30-65 basis points sequentially, estimates from five brokerages showed. During the previous quarter, the company's EBITDA margin had contracted 33 bps on year and 170 bps on quarter due to multiple one-off items, including a customer-specific issue.
Tata Communications will announce its June quarter earnings Thursday. Investors will watch out for management commentary on growth trajectory in the digital business, margin trajectory and updates on divestment of non-core subsidiaries, Nuvama said.
Tuesday, shares of Tata Communications closed at INR 1,728.70 on the National Stock Exchange, up 0.9% from the previous close. The stock has risen over 8% since the announcement of its March quarter earnings on Apr. 22, but fell nearly 21% from its all-time high of INR 2,175 hit on Oct. 3.
Of the seven research reports available on the company with Informist, five have a 'buy' or equivalent rating on the stock with an average target price of INR 2,010, while Motilal Oswal has a 'neutral' rating on the stock with a target price of INR 1,660 and Centrum Broking has a 'reduce' rating.
Following are the June earnings estimates for Tata Communications based on reports from five brokerage firms in descending order of the estimate of net profit:
| Broking Firm | Net Sales (in INR million) | Net Profit (in INR million) | EBITDA (in INR million) |
|---|---|---|---|
| JM Financial Institutional Securities Pvt Ltd | 60,982.00 | 3,201.00 | 11,608.00 |
| Centrum Broking Ltd | 61,442.00 | 3,002.00 | 11,797.00 |
| Motilal Oswal Financial Services Ltd | 60,900.00 | 3,000.00 | 11,800.00 |
| Kotak Institutional Equities | 59,788.00 | 2,848.00 | 11,360.00 |
| Nuvama Wealth Management Ltd | 60,199.00 | 2,628.00 | 11,493.00 |
| Average | 60,662.20 | 2,935.80 | 11,611.60 |
End
US$1 = INR 85.81
Edited by Deepshikha Bhardwaj
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