Digital uptick key for Tata Comm targets

Weak Q2, lower margin expectations may weigh on near-term outlook

- RAM PRASAD SAHU

The stock of Tata Communications has shed 16.3 per cent since the start of October.

Weak operating performance in the September quarter and lower margin expectations that led to the recent weakness in the stock price are expected to weigh on its near-term outlook.

The Q2 showing led to cuts in profit estimates and assumptions that the recovery in margins would be gradual.

Overall revenues of the company grew 18 per cent over the year-ago quarter and a sedate 2 per cent on a sequential basis.

Growth was boosted by ₹86.5 crore of other operating income relating to reversals from the prior period.

The revenue uptick was led by the data segment, which accounts for 84 per cent of revenues and was up 3 per cent on a sequential basis.