Tata Communications Ltd (TCL) just dropped its Q2FY25 numbers like an Indian parent showing electricity bills after you run the AC all night. Revenue stood at ₹6,100 crore (+6.5% YoY), while PAT collapsed to ₹183 crore (-18% QoQ) thanks to a Department of Telecom demand of ₹7,827 crore that would make even Airtel gulp. Current price: ₹1,917. Market cap: ₹54,640 crore. ROE still royal at 55%, but debt of ₹13,331 crore is as loud as a Mumbai auto horn. The stock has run +9% in 3 months but barely +3% in a year — like your salary after inflation. P/E 54.7 because Tatas don’t do cheap anything.
2. Introduction – From Government Baby to Global Daddy
Once a Government-owned VSNL that handled your 1990s “STD ka call lagao” moments, Tata Communications is now the digital pipe that lets Netflix and Zoom run smoothly in your office VPN. Incorporated in 1986, privatised in 2002, and rebranded in 2008, TCL is the Tata Group’s quiet workhorse — not as sexy as TCS, not as noisy as Airtel, but earning in dollars while billing in rupees.
Its business is as global as it gets — it owns the world’s only wholly owned sub-sea fibre optic ring and connects 70% of the world’s mobile carriers. Basically, every time you say “Hello from the other side,” somewhere Tata Comm earns a few paise. But lately, its growth looks like a BSNL dial-up page — slow and buffering.
3. Business Model – WTF Do They Even Do?
TCL is a digital ecosystem enabler, which is corporate for “we make the internet work for people who can’t afford to let it fail.” Their 3 main segments:
Data Business (80%) – includes global connectivity services (WAN, VPNs, private lines in 100+ countries), digital platforms like cloud, cyber-security, SD-WAN, UCaaS, and media ecosystem services for gaming and OTT.
Voice Business (~10%) – world’s largest wholesale voice carrier, handling 1 in 10 international calls. It’s like a telecom Rickshaw Union — small margin but massive volume.
Others (~10%) – includes Transformation Services (TCTS), Payment Solutions (TCPSL), and Real Estate rentals. Think of it as “side income department.”
Their new toys include Kaleyra AI for customer communication and the MOVE platform for eSIMs (BSNL deal). So basically, they sell bandwidth, brains, and bots.
4. Financials Overview
Metric
Latest Qtr (Q2 FY25)
YoY Qtr (Q2 FY24)
Prev Qtr (Q1 FY25)
YoY %
QoQ %
Revenue
6,100
5,728
5,960
6.5%
2.3%
EBITDA
1,174
1,129
1,137
4.0%
3.2%
PAT
183
227
190
-19.3%
-3.7%
EPS (₹)
6.4
7.9
6.7
-19.3%
-4.5%
Annualised EPS ≈ ₹25.6 ⇒ P/E ≈ ₹1,917 / 25.6 = 74.9× (if annualised on Q2). So yeah, valuation makes Apple look like a discount store.
Commentary: Revenue is creeping up but profit fell due to tax hits and lower other income. Operating margin steady at 19%. It’s like a cricketer scoring 40 runs every match — consistent but no centuries in sight.
5. Valuation Discussion – Fair Value Range (For Education Only)
Method 1: P/E Multiple Industry average ≈ 45×. Assuming FY25 EPS ≈ ₹58, Fair Value Range = ₹58 × (40–60) = ₹2,320–₹3,480.
Method 2: EV/EBITDA EV ₹67,644 Cr / EBITDA ₹4,600 Cr = 14.7× currently. Fair range 12–16× ⇒ EV ₹55,200–₹73,600 ⇒ Equity Value ₹1,960–₹2,620 per share.
📜 Educational Disclaimer: This fair value range is for learning purposes only and not investment advice. If you act on it, don’t blame the spreadsheet.
6. What’s Cooking – News, Triggers & Corporate Masala
DOT Demand Bomb: ₹7,827 crore demand for AGR dues — the government wants retro rent for the 90s. Case sub judice, so Tata Comm will probably fight like “yeh mera bill nahi hai.”
BSNL eSIM Deal: Using MOVE platform to power BSNL’s nationwide eSIM launch (Oct 2025). Irony level: Tata Comm powering BSNL is like Tesla charging rickshaws.
Kaleyra AI Integration: Adds AI-driven communications in 200+ countries. Basically, chatbots that actually reply faster than Indian customer care.
AWS Tie-up: ₹430 cr investment for AI-optimised 7.2 Tbps network across India. Translation: faster internet so your Netflix doesn’t buffer during IPL.
GSTAT Project: Multi-crore contract from Ministry of Finance to build digital infrastructure for GST tribunals (Sept 2025). When the tax department hires you, you know the firewall is real.
