Tata Communications' stock price takes a hit after Q1 earnings miss

Are you facing the investor's dilemma too? Tata Communications' Q1 slide demands attention. Read the complete article to understand the causes and potential opportunities ahead.

TCS stock price takes a hit

In a surprising turn of events, Tata Communications Limited experienced a 1.5 per cent drop in its shares, causing a stir in the market. With eight lakh shares changing hands on NSE, investors are left wondering about the reasons behind this unexpected decline. The company's net profit took a significant hit, plummeting by 30 per cent to Rs 382 crore. This decline can be attributed to higher interest costs and lower forex gains. As the market buzzes with speculation, this article delves deeper into the factors influencing Tata Communications' weak Q1 numbers from investors’ viewpoint.

  • Tata Communications shares drop 1%.
  • Net profit plunges 30% due to higher costs.
  • Q1 revenue grows by 11%, reaching 4,771 crore.
  • Connectivity services up 8.1%, digital services soar 37%.

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Stock price in last one year

Given below is the daily candle chart for the stock.

Stock price in last one year

The stock is currently trading at INR 1608 (at 12.45 pm on 20-July-2023). The stock is down by almost 1 per cent as compared to the previous day’s close and has given almost 20 per cent return in six-month duration.

Highlights of Q4 FY2022-23 results are given below:

  • The company’s Q4 net profit fell by 11% YoY to Rs 326.03 crore from Rs 365.06 crore.
  • Consolidated income (from operations) increased by a marginal 7.59% to Rs 4,586.66 crore in Q4 from Rs 4,263.03 crore.
  • Consolidated profit for the fiscal year ended March 31, 2023 increased by 21% to Rs 1,795.96 crore from Rs 1,481.76 crore at the end of previous fiscal year.
  • Company’s consolidated income from operations increased by 6.6% to Rs 17,838.26 crore at the end of FY 2022-23 from Rs 16,724.73 crore at the end of FY 2021-22.

Highlights of Q1 FY2023-24 results are given below:

  • The main connectivity services showed an 8.1% increase in revenue compared to last year. The digital services, on the other hand, experienced strong growth of 37% year-on-year, driven by all portfolios and the integration of Switch Enterprises.
  • Tata Communications Q1 net profit drops 30% YoY to Rs 382 crore due to higher interest costs and lower forex gains; was Rs 544 crore last year.
  • Revenue from operations increased by 11% YoY to Rs 4,771 crore in Q1 from Rs 4,310 crore in the same period of the previous fiscal year.
  • EBITDA decreased by 5% (for the June quarter) to Rs 1,024 crore
  • Data business revenues increased by 17% year-on-year to Rs 3,912 crore. The underlying data revenue growth was 14% year-on-year.
  • Data business revenues grew 17% on a yearly basis to 3.912 billion rupees. The underlying data revenue growth was 14% on a yearly basis.

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Tata Communications' Q1 results were disappointing, with net profit declining by 30% year-on-year. The company's data business is growing strongly, but higher interest costs and lower forex gains weighed on profitability. Investors will need to monitor the company's performance in the coming quarters to see if it can turn things around.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax advice.

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