CLSA has reaffirmed its Outperform rating on Tata Communications, with a target price of ₹2,100, following its recent management interaction that highlighted aggressive medium-term growth plans and improving profitability.
Tata Communications’ management laid out an ambition to grow data revenue from ₹19,500 crore to ₹28,000 crore by FY28, driven by increased enterprise demand for digital infrastructure. The company also reiterated its EBITDA margin guidance of 23–25% and a Return on Capital Employed (ROCE) target of 25%, signalling confidence in scalable profitability.
CLSA noted that the management’s growth outlook implies an 18% consolidated EBITDA CAGR, compared to CLSA’s current forecast of 15% CAGR to ₹6,900 crore by FY28. This potential upside, combined with ongoing efforts to monetise surplus land assets, adds to the company’s value-unlocking narrative.
Further, Tata Communications sees strong growth momentum in STT GDC, its data centre joint venture with ST Telemedia, which is benefiting from rising cloud adoption and enterprise storage needs.
Formerly known as VSNL, Tata Communications has transformed into a global digital ecosystem enabler, offering services in network connectivity, cloud hosting, unified communications, and cybersecurity. Its clients span 190+ countries and it powers approximately 30% of the world’s internet routes, making it a strategic infrastructure player.
Disclaimer: The views and target prices mentioned are as stated by CLSA and do not represent the opinions or recommendations of this publication. Investors are advised to consult their financial advisors before making any investment decisions.
