Tata Communications up 3% as one-off gain aids Q2 margins
Tata Communications reported a significant increase in other income to ₹36.4 crore compared to ₹13.4 crore in the previous quarter. As a result, net profit grew 43% sequentially to ₹420 crore
Shares of Tata Communications Ltd rose around 3% in early deals on Thursday, reacting to the company's September quarter financial performance. Earnings were a mixed bag, with revenues growing lower than expected, while cost optimisation measures and one-time gain aided operating margins.
Consolidated revenue stood at ₹4,170 crore, up 1.7% sequentially, but declined 5.2% year-on-year (y-o-y) due to the fall in voice business and moderation of collaboration traffic in data business, which is the key growth driver for the company. The sequential growth was attributable to a gradual pickup in business and improvement across data and voice segments, analysts said.
Ebitda rose around 13% sequentially to ₹1,110 crore, beating analysts' estimates, partly due to the ₹50 crore in one-offs related to employee expenses and the reversal of provisions for doubtful debts. As a result, Ebitda margin expanded 270 basis points to 26.7%. One basis point is one hundredth of a percentage point. Ebitda is short for earnings before interest, tax, depreciation and amortisation.
"Normalised for the above-mentioned estimated one-off gains of ₹50 crore, Ebitda stood at ₹1,060 crore (up 7.8% quarter-on-quarter), with strong 150bp margin improvement to 25.5%," analysts at Motilal Oswal Financial Services Ltd said in a report.
Further, the company reported a significant increase in other income to ₹36.4 crore compared to ₹13.4 crore in the previous quarter. As a result, its profit after tax grew 43% sequentially to ₹420 crore, adjusted for exceptional items, profit after tax at Rs410 crore, rose 42% sequentially, ahead of analysts' estimates.
On the flip side, its payment solutions business was been hit hard by the second covid wave as the number of transactions for Q2 was 56 compared to 64 in Q2FY21.
Meanwhile, its net debt fell by ₹240 crore on a sequential basis to ₹7,760 crore despite the ₹400 crore dividend payout this quarter.
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