Tata Communications Q2 Review - Outlook Brightening On Revenue Acceleration: ICICI Securities
Tata Communications' management is confident of order book build-up and sales funnel, and hinted at easing supply chain issues.
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ICICI Securities Report
Tata Communications Ltd.’s Q2 FY23 data revenue grew 4.6% QoQ / 11.2% YoY and showed significant acceleration though lower net revenue growth took away some lustre.
Net revenue growth was hit due to various factors including the high base of Q1 FY23, project execution cost, and low-margin new projects (showcase projects).
Tata Communications' management is confident of orderbook build-up and sales funnel, and it hinted at easing supply chain issue. Therefore, data revenue growth outlook has turned brighter in our view and is likely to significantly accelerate.
We believe net revenue growth will likely follow total revenue growth unlike this quarter. Lower Ebitda margin guidance of 23-25% is on intention to invest for growth, and absolute Ebitda expectation to improve eventually.
Digital services product portfolio is getting stronger, and Incubation had consistent growth in past few quarters which was lacking previously.
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