Future growth expectations in sales/revenue/volumes?

FY25 digital revenues grew by 29.5%, with sustained momentum over the last two years. Full-year consolidated revenues reached Rs. 23,109 crores, an 11.2% YoY increase; data revenues grew 13.7% YoY to Rs. 19,513 crores. Core connectivity growth was 2.5% QoQ and 3.2% YoY; large DC-to-DC connectivity deals expected to start contributing more significantly in 2H FY26. Digital portfolio revenue grew 5.5% QoQ and 17.5% YoY; cloud and security fabrics show strong order book and growth potential. Healthy sales funnel with large multi-fabric deals diversified across India and international markets. Opp

Future growth expectations in earnings/operating earnings/profits/EPS?

Tata Communications expects double-digit revenue growth, driven by a healthy funnel and strong order book, particularly in digital services and core connectivity. The company is committed to achieving EBITDA margins of 23%-25%, an ambition reiterated despite near-term challenges. Digital revenues reached Rs. 9,100 crores, nearing 50% of total revenues, supporting margin improvement strategies. Gradual cost synergies from acquisitions like Kaleyra and Switch are expected to play out in coming quarters, aiding profitability. Core EBITDA margins remain stable at around 23.3%, with subsidiaries an

Any current/future new fundraising through debt or equity?

Tata Communications issued a commercial paper recently at around 6.5%, which is part of their short-term debt management strategy. The company aims to maintain a net Debt-to-EBITDA ratio under 2x, considering this as their optimal capital structure. They plan to rotate short-term debt instruments like commercial papers based on working capital and cash flow needs for efficient capital sourcing. There is no specific mention of new large-scale debt or equity fundraising currently underway. The company intends to build and maintain a "war chest" of cash reserves from free cash flows to support fu

Any current/future capex/capital investment/strategic investment?

The company's cash capex for the full year was Rs. 2,206 crores, with Rs. 730 crores spent in the most recent quarter. There is continued investment in organic growth and innovation, especially in cloud, security, and digital portfolio areas. Strategic investments also include acquisitions like Kaleyra and Switch, which are approaching inflection points in synergy realization. The company is maintaining a war chest to invest both organically and inorganically for growth. Capital investments include infrastructure such as data center expansion, indicated by continued commitment to digital and c

Current/ Expected Orderbook/ Pending Orders?

H1 FY25 order book was strong with high double-digit growth and several large deals, including with an OTT player, World Athletics, and a large BFSI deal. H2 FY25 order book returned to more normal levels compared to H1 but still showed overall good growth for the year. Some deals expected to close in Q4 were rolled over to Q1 FY26 without cancellations or negative customer reactions due to tariff uncertainties. The overall funnel remains healthy with good additions and a good representation of large deals, diversified across India and international markets. Large deals include multi-f

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Tata Communications LtdQ1 FY25Telecom - Services

Tata Communications Ltd Q1 FY25 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹2,042P/E: 43.5Market Cap: ₹47.9K CrSector: Telecom - Services

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→FY25 digital revenues grew by 29.5%, with sustained momentum over the last two years.
→Full-year consolidated revenues reached Rs. 23,109 crores, an 11.2% YoY increase; data revenues grew 13.7% YoY to Rs. 19,513 crores.
→Core connectivity growth was 2.5% QoQ and 3.2% YoY; large DC-to-DC connectivity deals expected to start contributing more significantly in 2H FY26.
→Digital portfolio revenue grew 5.5% QoQ and 17.5% YoY; cloud and security fabrics show strong order book and growth potential.
→Healthy sales funnel with large multi-fabric deals diversified across India and international markets.
→Opportunities driven by AI infrastructure investments and hyperconnected ecosystems.
→Management emphasizes continued double-digit growth with full-year FY26 expected to maintain positive momentum amid cautious macroeconomic conditions.
→Growth ambitions include doubling data business and targeting Rs. 28,000 crores in data revenues by FY27.

Margin guidance

Category 2

→Tata Communications expects double-digit revenue growth, driven by a healthy funnel and strong order book, particularly in digital services and core connectivity.
→The company is committed to achieving EBITDA margins of 23%-25%, an ambition reiterated despite near-term challenges.
→Digital revenues reached Rs. 9,100 crores, nearing 50% of total revenues, supporting margin improvement strategies.
→Gradual cost synergies from acquisitions like Kaleyra and Switch are expected to play out in coming quarters, aiding profitability.
→Core EBITDA margins remain stable at around 23.3%, with subsidiaries and recent acquisitions currently dilutive but improving.
→ROCE is expected to improve positively with debt reduction and profitability enhancements.
→Net debt-to-EBITDA is targeted below 2x within the next couple of quarters, supporting financial stability.
→Large deals in cloud, security, and connectivity fabrics are expected to contribute to revenue acceleration in FY26 and beyond.
→Management anticipates no fundamental shift in margin or ROCE targets, viewing current headwinds as timing issues.

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Fundraise plans

Yes

→Tata Communications issued a commercial paper recently at around 6.5%, which is part of their short-term debt management strategy.
→The company aims to maintain a net Debt-to-EBITDA ratio under 2x, considering this as their optimal capital structure.
→They plan to rotate short-term debt instruments like commercial papers based on working capital and cash flow needs for efficient capital sourcing.
→There is no specific mention of new large-scale debt or equity fundraising currently underway.
→The company intends to build and maintain a "war chest" of cash reserves from free cash flows to support future organic and inorganic growth opportunities, including acquisitions.
→Dividend policy remains unchanged, paying 30%-50% of consolidated profits; excess free cash flow, however, is not slated for dividend distribution but for growth funding.
→Any future decisions on exiting or increasing stakes in affiliates, which might affect capital raise, will be communicated once decided by the Board.

Order book

Yes

→H1 FY25 order book was strong with high double-digit growth and several large deals, including with an OTT player, World Athletics, and a large BFSI deal.
→H2 FY25 order book returned to more normal levels compared to H1 but still showed overall good growth for the year.
→Some deals expected to close in Q4 were rolled over to Q1 FY26 without cancellations or negative customer reactions due to tariff uncertainties.
→The overall funnel remains healthy with good additions and a good representation of large deals, diversified across India and international markets.
→Large deals include multi-fabric wins, such as a healthcare provider deal in APAC implementing network and cloud/security fabric (SASE stack) and a European network fabric deal modernizing a telecom manufacturer's architecture.
→No immediate impact on order book from macroeconomic uncertainties or tariff issues was observed.

Capex plans

Yes

→The company's cash capex for the full year was Rs. 2,206 crores, with Rs. 730 crores spent in the most recent quarter.
→There is continued investment in organic growth and innovation, especially in cloud, security, and digital portfolio areas.
→Strategic investments also include acquisitions like Kaleyra and Switch, which are approaching inflection points in synergy realization.
→The company is maintaining a war chest to invest both organically and inorganically for growth.
→Capital investments include infrastructure such as data center expansion, indicated by continued commitment to digital and connectivity fabrics.
→Monetization of certain land parcels is ongoing to support internal growth needs.
→No explicit new major capital investment announcements are disclosed; however, the company has a roadmap and plans for future large land parcel monetizations and strategic reviews of non-core and core business assets for growth and margin improvements.

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