Tata Communications (Q1 FY13)

India Infoline News Service | Mumbai |

Tata Comm consolidated revenues up 26% yoy driven by healthy growth in both global voice and data businesses

CMP Rs248, Target Rs210, Downside 15.3% 
  • Tata Comm consolidated revenues up 26% yoy driven by healthy growth in both global voice and data businesses; Neotel gross revenues were up 21% yoy but remained flat qoq in local currency terms at ZAR690mn

  • Reported EBIDTA margin improved 295bps yoy as Neotel turn around to post operating profit of Rs594mn vs operating loss of Rs603mn a year ago; on a qoq basis too, Neotel EBIDTA jumped 135%. Although consolidated EBIDTA rose 72bps qoq but adjusted for one time actuarial loss on pension fund of Rs828mn in Q4 FY12, margin was lower by 137bps qoq. As per mgmt estimates, EBIDTA margin in global data segment declined 60bps qoq while that on global voice improved 50bps qoq

  • Reported loss at Rs1.4bn was lower both yoy and qoq due to Rs1.1bn in other income from reversal of a provision made in an earlier year; core business net debt remained virtually unchanged qoq at US$1.5bn; company retained its FY13 core capex guidance of US$250-300mn  

  • Neotel gross revenues have remained tepid in local currency over the past 3 quarters even as consolidated balance sheet continues to be highly leveraged. Although the recent news flow on land demerger appears positive, we believe valuations have run much ahead of fundamentals. We narrow our FY14 loss estimate but downgrade to SELL with revised 9-mth SOTP tgt of Rs210 (earlier Rs195). 

Results table (consolidated)
(Rs m) Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Net sales 41,074 32,571 26.1 39,613 3.7
Network costs (22,681) (18,802) 20.6 (21,610) 5.0
Operating & other exp. (7,061) (5,593) 26.3 (6,863) 2.9
Personnel costs (6,004) (4,913) 22.2 (6,287) (4.5)
Operating profit 5,328 3,263 63.3 4,853 9.8
OPM (%) 13.0 10.0 295 bps 12.3 72 bps
Depreciation (5,290) (4,204) 25.8 (4,928) 7.4
Interest (2,063) (2,044) 0.9 (1,858) 11.0
Other income 1,133 404 180.1 540 109.6
PBT (893) (2,580) (65.4) (1,393) (35.9)
Tax (528) (207) 154.8 (13) -
Minority Int/Associates (8) 633 - (1,204) -
Reported PAT (1,429) (2,155) (33.7) (2,609) (45.3)
Source: Company, India Infoline Research
 
Financial summary
Y/e 31 Mar (Rs m) FY11 FY12 FY13E FY14E
Revenues 119,320 141,961 161,845 184,355
yoy growth (%) 8.2 19.0 14.0 13.9
Operating profit 12,253 17,915 22,011 25,810
OPM (%) 10.3 12.6 13.6 14.0
Pre-exceptional PAT (7,098) (7,947) (6,546) (4,187)
Reported PAT (7,769) (7,947) (6,546) (4,187)
yoy growth (%) 30.0 2.3 (17.6) (36.0)
         
EPS (Rs) (27.3) (27.9) (23.0) (14.7)
P/BV (x) 2.0 3.1 4.3 5.8
EV/EBITDA (x) 14.2 11.8 10.2 8.9
ROCE (%) (0.5) 0.7 1.9 3.1
Source: Company, India Infoline Research
BSE 709.85 [4.20] ([0.59]%)
NSE 709.10 [6.30] ([0.88]%)

***Note: This is a NSE Chart

 

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