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Tata Communications (Q2 FY13)

India Infoline News Service | Mumbai |

Tata Communications (Q2 FY13)

CMP Rs249, Target Rs210, Downside 15.7%

  • Tata Comm posted healthy ~27% yoy revenue growth driven by strong traction in both voice (+34% yoy) and data businesses (+25.4% yoy)

  • In voice business, ILD volumes continue to outpace industry growth at +16% yoy while net rev/min declined qoq though impacted by one-offs

  • EBIDTA margin down 388bps due to 1) regulatory impact (WiMax WPC charges and increase in license fees) 2) one time actuarial loss on Canada pension fund 3) unfavourable settlements in global voice business and 4) increased sales and investments

  • Neotel Q2 revenues grew 4.6% yoy/5.5% qoq though sequential EBIDTA did decline ~13% to Rs516mn

  • Reported loss widened to Rs2.7bn vs ~Rs1.6bn a year ago impacted by margin pressure and increased depreciation; Q1 FY13 other income included Rs1.1bn in one off income and hence reported loss figures not comparable qoq; core business net debt remain virtually unchanged at ~US$1.6bn

  • Based on H1 performance we revise our estimates but expect losses to continue to over next 2 years; retain SELL with 9-mth target of Rs210 

Results table (consolidated)
(Rs m)Q2 FY13Q2 FY12% yoyQ1 FY13% qoq
Net sales42,71033,73626.641,0744.0
Network costs(24,043)(18,625)29.1(22,681)6.0
Operating & other exp.(7,894)(5,442)45.1(7,061)11.8
Personnel costs(6,380)(4,890)30.5(6,004)6.3
Operating profit4,3944,780(8.1)5,328(17.5)
OPM (%)10.314.2(388) bps13.0(268) bps
Depreciation(5,307)(4,340)22.3(5,290)0.3
Interest(2,112)(2,519)(16.2)(2,063)2.4
Other income318(19)-1,133(71.9)
PBT(2,708)(2,098)29.1(893)203.3
Tax(189)(284)(33.6)(528)(64.3)
Minority Int/Associates154730(78.9)(8)-
Reported PAT(2,742)(1,652)66.0(1,429)92.0
Source: Company, India Infoline Research
 
Financial summary
Y/e 31 Mar (Rs m)FY11FY12FY13EFY14E
Revenues119,320141,961164,668190,510
yoy growth (%)8.219.016.015.7
Operating profit12,25317,91521,73626,100
OPM (%)10.312.613.213.7
Reported PAT(7,769)(7,947)(6,889)(3,824)
yoy growth (%)30.02.3(13.3)(44.5)
     
EPS (Rs)(27.3)(27.9)(24.2)(13.4)
P/BV (x)2.03.14.55.9
EV/EBITDA (x)14.311.910.38.8
ROCE (%)(0.5)0.71.73.3
Source: Company, India Infoline Research
BSE 359.20 1.30(0.36%)
NSE 359.20 0.80(0.22%)
As on: 01 Jan 70, 05:30

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