Buy Tata Communications, target price Rs 1671: ICICI Securities

ICICI Securities has buy call on Tata Communications with a target price of Rs 1671. The current market price of Tata Communications Ltd. is Rs 1348.5.

Time period given by analyst is one year when Tata Communications Ltd. price can reach defined target.

Tata Communications Ltd., incorporated in the year 1986, is a Mid Cap company (having a market cap of Rs 38460.75 Crore) operating in Telecommunications sector.


Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 4130.95 Crore, down -2.37 % from last quarter Total Income of Rs 4231.05 Crore and down -6.86 % from last year same quarter Total Income of Rs 4435.22 Crore. Company reported net profit after tax of Rs 298.73 Crore in latest quarter.

Investment Rationale
The analysis shows TCom’s GDS margins have headroom to grow from the existing levels, unlike investors’ fear of unsustainable margin expansion. It has updated the model for annual report and increased EPS by ~3% each for FY22E/FY23E. Its target price stands at Rs1,671 (from Rs1,461) as it increases P/E multiple (FY23) to 20x (from 18x).

Promoter/FII Holdings
Promoters held 58.9 per cent stake in the company as of March 31, 2021, while FIIs held 24.9 per cent, DIIs 4 per cent and public and others 9.2 per cent.