TATACOMM - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.6

📊 Core Financials Analysis

Profitability

ROE of 55.2% is exceptionally strong, indicating high shareholder returns.

ROCE of 14.8% is decent, though not outstanding given the capital-intensive nature of telecom infrastructure.

EPS of ₹59.4 supports earnings strength, but recent PAT decline (–17.4%) suggests some volatility.

Debt & Leverage

Debt-to-equity ratio of 4.09 is very high — a major red flag. This leverage could pressure future cash flows and limit flexibility.

Needs close monitoring of interest coverage and debt servicing capacity.

Cash Flow

Not provided, but high debt implies potential strain unless operating cash flows are robust.

📉 Valuation Indicators

Metric Value Insight

P/E Ratio 47.4 Slightly undervalued vs. industry PE of 50.7

P/B Ratio ~16.3 Extremely high — suggests overvaluation on asset basis

PEG Ratio -13.8 Negative PEG indicates earnings contraction or unreliable growth

Intrinsic Value Likely below CMP Due to high debt and valuation multiples

🏢 Business Model & Competitive Advantage

Business Model: Tata Communications is a global digital infrastructure provider, offering network, cloud, and cybersecurity services.

Strengths

Strong brand and global footprint.

High ROE suggests efficient use of equity capital.

Weaknesses

Heavy debt burden.

Earnings volatility and high valuation.

📌 Entry Zone & Investment Guidance

Entry Zone: ₹1,600–₹1,675 range near 200 DMA could be a safer entry point.

Long-Term View

Suitable for investors with high risk tolerance and belief in digital infrastructure growth.

Watch debt levels and quarterly earnings closely.

Hold if already invested, but avoid fresh entry at current levels unless debt is addressed.

Would you like a breakdown of its debt structure or a comparison with peers like Bharti Airtel or Sterlite Technologies?

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