Despite overall operating profit growth, the company reported a loss at the net level of Rs 272 crore due to a Rs 378 crore exceptional item. Adjusted net profit for the quarter was Rs 103 crore as compared to a loss of Rs 27 crore a year ago.
Given the corporate digitisation trends, sharp surge in data traffic, especially after the onset of the pandemic and the shift from products to being a platform services company, is expected to boost its revenues going ahead.
Deleveraging of the balance sheet (debt of over Rs 9,176 crore) and resolution of the adjusted gross revenue demand by the Department of Telecommunications (DoT) are additional triggers for the stock.
While net debt to operating profit under 3 times is in control, how the pending Tata Teleservices acquisition pans out could influence debt levels. Though business prospects are strong, given the sharp stock surge (up 143 per cent) since the start of this financial year, average target prices at the Rs 630 levels leaves little upside from current levels.