Why 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.
