Tata Communications, a renowned Tata Group company, has witnessed a noticeable loss in momentum over the past year. While the stock has delivered exceptional long-term returns — surging by 324% over five years and 457% over ten — it has recently seen a wave of profit-booking. From its record high of ₹2,175 on October 3, 2024, the stock has fallen by 28%. Over the past six months, it is down by 12.16%, and on a one-year basis, it has declined by 10.15%.
Brokerage firms have mixed views on the company’s short-term prospects following its Q4 FY25 results. Centrum Broking has issued a ‘Reduce’ rating on the stock, citing a revision in earnings estimates. The brokerage now pegs its target price at ₹1,618, down from ₹1,713. Centrum projects an EBITDA margin of 22% in the near term and expects revenue, EBITDA, and PAT to grow at a CAGR of 10.8%, 19.8%, and 51.5%, respectively, from FY25 to FY27. The brokerage values the stock at 8.5x EV/EBITDA for March 2027.
In contrast, JM Financial maintains a ‘Buy’ rating but has revised its target price downwards to ₹2,000 per share from ₹2,030. Their valuation is based on 11x FY27 EV/EBITDA for the data segment, which reflects a positive long-term outlook. The brokerage highlights a strong data segment growth with an expected 24% EBITDA CAGR over FY25–FY28. However, they also point out a moderation in order book growth and funnel additions in Q4FY25, even though the overall pipeline remains robust both domestically and internationally.
Motilal Oswal Financial Services (MOFSL) has taken a more neutral stance. While the brokerage has retained its ‘Neutral’ rating, it acknowledges slight optimism by raising revenue estimates for FY26–FY27 by 1–2%. However, MOFSL notes that Tata Communications’ goal of doubling its data revenue by FY27 appears ambitious without additional acquisitions. The firm projects a 9% data revenue CAGR, targeting ₹26,200 crore by FY28 — slightly below the company’s aim of ₹28,000 crore by FY27.
MOFSL values the stock using a sum-of-the-parts (SoTP) approach — assigning 9x EV/EBITDA to the data business, 5x to voice and other segments, and an added ₹104 per share for its 26% stake in STT data centers. The target price remains unchanged at ₹1,660, as recent EBITDA downgrades are offset by rolling forward the valuation base to June 2027.
On the market front, Tata Communications was trading flat at ₹1,570.20 on the BSE, slightly down from the previous close of ₹1,584.25. Around 5,112 shares changed hands, with a total turnover of ₹80.57 lakh. The company’s market capitalization currently stands at ₹45,005 crore.
Financially, the company reported robust growth in Q4 FY2025, with net profit skyrocketing 223.6% to ₹1,040.5 crore. Revenue from operations rose by 6.1% YoY, reaching ₹5,990.4 crore for the quarter. Tata Communications operates across three key segments — Voice Solutions (VS), Data and Managed Services (DMS), and Real Estate (RE). The VS segment covers international and national long-distance voice services, while DMS includes corporate data transmission, VPN signaling, roaming services, and television/network management. The RE segment focuses on lease rentals from properties.
