Buy Tata Communications; target of Rs 630: Motilal Oswal

Motilal Oswal's research report on Tata Communications

TCOM reported a strong set of numbers for 3QFY19, even excluding one-offs. Headline consolidated revenue/EBITDA grew 5%/34% QoQ to INR42.7b/INR8.4b, led by strong growth in the data business, partly offset by voice. Adjusting for one-offs, key growth levers - data revenue/EBITDA grew 5%/4%. Yet, weak voice business offset consolidated revenue/EBITDA growth of 3%/flat QoQ to INR41.8b/INR6.3b. Adjusted PAT stood at INR231m (our estimate of INR483m). For 9MFY19, revenue/EBITDA grew -3%/17% YoY.

Outlook

We have also reduced target EV/EBITDA multiple to 6x v/s 8x earlier, i.e. ~30% discount to 5-year average. Yet, given that the stock already factors in the concerns, we maintain Buy.

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Read More First Published on Feb 1, 2019 02:08 pm