ICICI Securities Maintains Bullish Outlook on Tata Communications, Targets Rs 2100
Tata Communications Posts Strong Q4FY26 Results, Eyes Durable Growth
Tata Communications, a leading telecommunications company, has reported a significant uptick in its earnings before interest, taxes, depreciation, and amortization (EBITDA) for its data business in the fourth quarter of fiscal year 2026 (Q4FY26). The company's EBITDA for its data business saw a 17.6% year-over-year (YoY) increase, with the growth partially attributed to the depreciation of the Indian rupee (INR). This trend is in line with the company's growing order book (OB), which continues to expand at a healthy double-digit rate.
The company's digital revenue also experienced a notable 19% YoY growth in Q4FY26, accompanied by a decrease in EBITDA losses. The new management's focus on achieving durable and profitable growth appears to be paying off, with a strong demand for digitizing supply chains and the implementation of artificial intelligence (AI) agents across services. The company has identified areas for improvement, including enhancing communication and awareness about its products and capabilities, particularly in AI enablement.
Key Highlights from Q4FY26 Results
| Metric | Q4FY26 | Q4FY25 |
|---|---|---|
| EBITDA Growth (YoY) | 17.6% | - |
| Digital Revenue Growth (YoY) | 19% | - |
| Order Book Growth (YoY) | Double-digit | - |
The management is expected to share its priorities and medium-term outlook in the upcoming annual investor meeting, including its earlier guidance of achieving INR 280 billion in data revenue by fiscal year 2028 (FY28). Given these developments, ICICI Securities has revised its estimates for Tata Communications. The research firm has tweaked its earnings per share (EPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates for FY27 and FY28, leading to a revised standalone price-to-earnings (SoTP)-based target price of INR 2,100. The company's core business EV/EBITDA multiple remains unchanged at 12x. ICICI Securities maintains a BUY recommendation for Tata Communications.
Investor Takeaway
Investors should consider Tata Communications' potential for durable and profitable growth, driven by strong demand for digitising supply chain and AI enablement.
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