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Tata Communications (Q2 FY14)

India Infoline News Service | Mumbai |

Tata Comm reported robust Q2 results with EBIDTA jump of 90% yoy and 28% qoq as margins improved 660bps yoy to 16.9%

CMP Rs248, Target Rs250, Upside 0.8%

  • Tata Comm reported robust Q2 results with EBIDTA jump of 90% yoy and 28% qoq as margins improved 660bps yoy to 16.9%

  • Gross revenues increased 16% yoy driven by 19% rise in data sales and ~15% yoy growth in voice business; EBIDTA margin improved due to all round operating cost reduction especially staff expenses

  • Core business (ex-Neotel) EBIDTA jumped ~82% yoy to ~Rs7bn as margins rose in both voice (+480bps yoy to 10.9%) and data (+660bps to 22.1%); company mentioned that voice business margins may be back to high single digit as Q2 voice margins benefited from sharp INR depreciation which raises India termination charge (priced in US cents)

  • Neotel gross revenues rose 11.4% qoq and EBIDTA up 31.7% qoq to Rs1.3bn; company is in exclusive discussion with Vodacom SA to divest 100% stake in Neotel

  • Company retained capex guidance of US$300mn in FY14; core capex intensity (core capex/core revenues) declined to 8.5% in H1 FY14 from 10.4% in FY13

  • Payment solutions subsidiary TCPSL manages ~18,000 ATMs most of which are 3rd party/managed ATMs and had H1 revenues of Rs2.3bn and EBIDTA loss of Rs593mn

  • We revise upwards our FY14/15 estimates on the back of expected higher margins over next two years but retain Market Performer with revised 9-12 mth target of Rs250

Results table (consolidated)
(Rs m)
Q2 FY14
Q2 FY13
% yoy
Q1 FY14
% qoq
Net sales
49,526
42,710
16.0
44,980
10.1
Network costs
(26,841)
(24,143)
11.2
(24,778)
8.3
Operating & other exp.
(8,458)
(7,794)
8.5
(7,664)
10.4
Personnel costs
(5,863)
(6,380)
(8.1)
(6,022)
(2.6)
Operating profit
8,364
4,394
90.4
6,516
28.4
OPM (%)
16.9
10.3
660 bps
14.5
240 bps
Depreciation
(5,431)
(5,307)
2.3
(5,037)
7.8
Interest
(2,010)
(2,112)
(4.8)
(1,663)
20.9
Other income
393
318
23.8
264
49.2
PBT
1,316
(2,708)
-
79
-
Tax
(511)
(189)
171.0
(1,298)
-
Minority Int/Associates
(1)
154
-
2
-
Extra ordinary items
-
-
-
2,162
-
Reported PAT
804
(2,742)
-
945
(15.0)
Source: Company, India Infoline Research

Financial summary
Y/e 31 Mar (Rs m)
FY12
FY13
FY14E
FY15E
Revenues
141,961
172,130
202,446
231,574
yoy growth (%)
BSE 434.60 4.40(1.02%)
NSE 434.60 4.45(1.03%)

***Note: This is a BSE Chart









 

 
 
 
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