Q4 Data EBITDA increased by 39.8 per cent with margin expansion of 530 Bps YoY on the back of robust performance in traditional and growth services aided by an uptick in usage due to the Covid-19
pandemic and ensuing lockdowns.
The company witnessed strong profitable growth in the data business. In FY20, EBITDA margins for data business expanded by 310 bps to 22.1 per cent on the back of growth services delivering Rs 199 crore of EBITDA for the year. The management said the company continues to drive the business towards sustainable profitability and positive cashflows.
“The management is looking to achieve double-digit EBITDA growth, despite an estimate of flat global enterprise network spends over the next four years. Tata Communications
plans to leverage sub-markets
like Cloud Connect and SD-WAN managed services, which are expected to see healthy growth along with Enterprise Mobility. However, this is possible if Tata Communication restricts losses in new growth verticals, especially the Innovation segment,” Motilal Oswal Financial Services said in a note.
However, given the company’s volatile earnings in the past and sticky debt levels, consistency of its performance is a key factor, which could drive better valuation, the brokerage said. "We maintain a cautious stance on Tata Communications and would keenly watch the execution of its stated strategies to drive healthy revenue/EBITDA growth in a stagnant market," it said.