iifl-logo-icon 1

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

Tata Communications: India CommTech play trading well below global peers

2 Apr 2024 , 11:37 AM

Analysts of IIFL Securities take a look at TCOM’s positioning as a CommTech player and the company’s recent strides towards becoming one. A CommTech player lies somewhere between a telco and a system integrator (SI), in terms of asset lightness, margin profile and return ratios. A flurry of new product launches, partnership with NVIDIA and organisational changes are steps towards strengthening TCOM’s CommTech credentials, in analysts of IIFL Securities view. TCOM’s target to double its data revenue between FY23 and FY27 entails ~40% digital portfolio revenue Cagr. Acquisitions of Switch and Kaleyra would go a long way in helping achieve this target. Analysts of IIFL Securities also note that global CommTech players trade at an average of 1YF 10x EV/sales. At 5x/10x EV/sales for TCOM’s digital portfolio, March’25 fair value per share comes to ~Rs3,092/Rs5,292. This suggests a significant upside, if TCOM’s Digital portfolio business achieves scale and drives re-rating. Analysts of IIFL Securities raise Mar’25 TP to Rs2,342. However, demand weakness could weigh on near-term financials and offer a better entry point. Maintain ADD.

Positioning itself as a CommTech player:

CommTech players fall in the middle of the spectrum between telcos on one end and SIs on the other. CommTech players like TCOM work very closely with client teams on the specifications of their requirements, resulting in tailor-made solutions. TCOM offers a single pane of glass architecture for clients to view, monitor and troubleshoot the network.

TCOM’s transition towards a CommTech player is on track:

TCOM’s FY27 revenue target implies 40% revenue Cagr for the Digital portfolio (a proxy for CommTech). The acquisition of Switch has expanded TCOM’s capabilities in media and geographical footprint (US). Integration of Kaleyra (CPaaS) has started on a healthy note, with margins springing a significant positive surprise. NVIDIA’s announcement of a collaboration on AI Cloud connectivity also augurs well.

Global CommTech players command premium valuation:

A glance at global CommTech players indicates 10x average 1YF EV/sales. Three/five out of the eight CommTech players that analysts of IIFL Securities looked at are Ebitda/PAT loss-making. However, their average revenue in CY23 was ~US$2.5bn vs US$1bn annualised Q3FY24 run-rate for TCOM; suggesting their significantly better scale. Even if analysts of IIFL Securities value TCOM’s Digital portfolio at 50% discount to global CommTech on EV/sales, potential upside comes to 50%.

Related Tags

  • Tata Communications
sidebar mobile


12 Apr 2024   |   01:37 PM
12 Apr 2024   |   10:20 AM
12 Apr 2024   |   10:16 AM
Read More
Knowledge Centerplus

Logo IIFL Customer Care Number
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

Knowledge Centerplus

Follow us on


2024, IIFL Securities Ltd. All Rights Reserved

  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.


Get better recommendations & make better investments

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp