Macquarie has reiterated its outperform rating on Tata Communications with a target price of ₹2,210 following management commentary at a recent non-deal roadshow. The company has set ambitious targets of achieving ₹280 billion in data revenue by FY28, a 45% increase from FY25 levels, implying a 13–14% compound annual growth rate. Around 65% of overall data revenue is expected to come from its digital portfolio.
Alongside growth, management aims to restore EBITDA margins to the 23–25% range and return on capital employed to 25% over the same period. A 300–500 basis points margin expansion is guided, to be driven by reducing losses in the digital portfolio and leveraging incremental margin levers. These include operating leverage, bundling and cross-sell opportunities in its customer interaction suite, larger enterprise deals with higher stickiness, and streamlining of lower-margin legacy contracts.
Macquarie said Tata Communications’ strategic roadmap demonstrates a strong focus on sustainable growth and profitability improvement, with digital services at the core of its long-term value creation.
Disclaimer: The views and recommendations made in this article are those of Macquarie. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
