Tata Communications shares have fallen for the eighth day in a row, dropping over 5%

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Tata Communications shares have fallen for the eighth day in a row, dropping over 5%

Team FS

19/Apr/2024

Key Points:

Continuous Decline: Tata Communications shares continue their downward trend for the eighth consecutive day, marking a significant drop of over 5% and emerging as the top Nifty Midcap loser.
Analyst Outlook: Kotak Institutional Equities maintains a 'sell' rating on Tata Communications, citing concerns over organic data revenue growth and declining margins, despite the company's ambitions for recovery.
Financial Snapshot: Despite a 24.6% increase in revenue from operations, Tata Communications witnesses a 1.5% dip in net profit in the March quarter, with EBITDA margin declining to 18.6%.

Tata Communications finds itself amidst a prolonged downward trend as its shares continue to slide for the eighth consecutive day. With a staggering drop of over 5%, the stock emerges as the top Nifty Midcap loser, highlighting the challenges faced by the company in the current market scenario.

Analyst Caution and Rating Adjustment
Amidst the stock's decline, Kotak Institutional Equities maintains a cautious stance, retaining a 'sell' rating on Tata Communications. Analysts express concerns regarding the company's organic data revenue growth, which further moderates to 4.8%, and declining margins. Despite Tata Communications' aspirations for recovery, the brokerage reduces the stock's fair value, reflecting prevailing uncertainties in the market.

Mixed Financial Performance
Financially, Tata Communications reports a mixed bag of results for the March quarter. While there is a notable 24.6% increase in revenue from operations, the company witnesses a slight dip of 1.5% in net profit. Moreover, the EBITDA margin experiences a decline to 18.6%, indicating ongoing challenges in maintaining profitability amidst market headwinds.

Dividend Recommendation and Future Ambitions
Despite the turbulent market conditions, Tata Communications' board of directors recommends a final dividend for FY24, offering shareholders some respite amidst the stock's extended losses. Looking ahead, the company remains focused on its ambitious growth targets, aiming to double data revenue by FY27 and restore EBITDA margins to 23-25% in the medium term. However, analysts view these goals as ambitious, considering the current market dynamics and operational challenges faced by the company.

Conclusion:
As Tata Communications navigates through the complexities of the market, the road ahead presents both challenges and opportunities. With a strategic focus on enhancing its digital portfolio and driving value for stakeholders, the company remains committed to overcoming hurdles and emerging stronger in the ever-evolving telecommunications landscape.

Also Read : Aurionpro Solutions Acquires AI Startup Arya.ai: A Strategic Move in the Digital Frontier

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Tata Communications shares have fallen for the eighth day in a row, dropping over 5%

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