Edit this postWhy Does Nuvama Stay Bullish on Tata Communications Despite Margin Pressure?
Nuvama Institutional Equities has maintained its BUY rating on Tata Communications (TCOM) while revising its target price to ₹2,235 from ₹2,020, viewing it as a “stable + growth hybrid” combining telecom infrastructure with digital solutions.
In Q2FY26, TCOM reported revenue of ₹61 billion, up 2.3% sequentially and 6.5% year-on-year, broadly in line with estimates. Data revenue rose 7.1% YoY, while digital business revenue surged 14.5% YoY, underscoring growing traction in enterprise and cloud services.
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EBITDA margin improved by 17 basis points to 19.2%, while adjusted PAT stood at ₹2 billion — marginally below estimates. Despite the miss, management reiterated its long-term goal of sustaining a double-digit revenue CAGR through FY28.
Nuvama slightly trimmed FY26E/FY27E EBITDA by 7% and 0.5%, respectively, due to near-term margin pressure but maintained its bullish stance, rolling forward valuations to September 2027 estimates.
The brokerage continues to view Tata Communications as a unique telecom-technology hybrid offering predictable cash flows with upside from enterprise cloud and IoT growth.
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The note suggests maintaining exposure with a long-term horizon as digital transformation remains the key growth engine for Tata Communications.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that Tata Communications’ diversified business mix supports steady earnings visibility even amid margin volatility.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
