1. At a Glance
From monopoly-era dial-ups to cloud-powered AI networks, Tata Communications has been there, done that—and laid the fiber under the ocean for it too. But in the age of hyperscalers and fintech disruptors, can this Tata be the cat that catches tomorrow’s data mouse?
2. Introduction with Hook
Imagine being the guy who built the internet’s backbone, literally. Tata Communications, née VSNL, owns the world’s only wholly owned subsea cable ring and serves 300 of the Fortune 500. But here’s the plot twist—it’s being valued like your average telco, not the digital boss it could be.
- Market Cap: ₹49,282 Cr
- Q4FY25 Net Profit: ₹1,041 Cr (up 218% QoQ!)
- ROE: Massive 55.2%
In a sector drowning in liabilities and lag, this company’s moat stretches under the sea—and possibly into your portfolio.
3. Business Model (WTF Do They Even Do?)
Verticals & Services:
- DMS (Data Managed Services) – the bread and broadband
- Voice Services – largest wholesale voice provider globally
- Cloud, Collaboration, Security & IoT Solutions
- Submarine cable leasing – literal “underground” business
- Real estate & Payment Solutions (now demerged/monetized)
TCL’s pivot from voice to next-gen digital infrastructure positions it closer to a hybrid between Equinix and Cloudflare than Airtel or Vi.
4. Financials Overview
Annual Sales (FY25): ₹23,109 Cr
Net Profit: ₹1,837 Cr
3-Year Sales CAGR: 11%
3-Year PAT CAGR: -3% (but FY25 reversal is strong)
Operating Margins: ~20% and stable
ROE: 55.2%
ROCE: 14.8%
Key point: Margins have held up despite tech transitions and asset divestments. The profitability hockey stick is showing signs of returning.
5. Valuation
- P/E Ratio: 37.2x
- Book Value: ₹106 → P/B: 16.3x (ouch)
- Fair Value Range Estimate (DCF, PE Band, EV/EBITDA):
₹1,500 – ₹2,050
Yes, it’s expensive on paper. But then again, so is owning your own global fiber-optic kingdom.
6. What’s Cooking – News, Triggers, Drama
- Kaleyra AI Launched: Conversational AI with real-time multilingual voice chat? Hello, ChatGPT, meet Tata.
- Submarine Network Upgrades (TGN-IA2)
- Divestments: Sold TCPSL (payments biz), NetFoundry stake diluted → capital unlock
- Cloud Push: Hosted SASE launch + NVIDIA GPU-powered AI infra
- Sustainability Loan: $250M green debt—good ESG optics
7. Balance Sheet
| Metric | FY25 |
|---|---|
| Equity Capital | ₹285 Cr |
| Reserves | ₹2,736 Cr |
| Borrowings | ₹12,357 Cr |
| Total Liabilities | ₹26,444 Cr |
| Fixed Assets + CWIP | ₹15,019 Cr |
| Investments | ₹2,714 Cr |
Key Insights:
- Debt increased but manageable due to strong cash flows
- CWIP peaking—capex cycle nearing maturity
- Strategic investments trimmed for core focus
8. Cash Flow – Sab Number Game Hai
| FY (₹ Cr) | Operating | Investing | Financing | Net Flow |
|---|---|---|---|---|
| FY23 | 4,384 | -1,836 | -2,241 | 308 |
| FY24 | 3,182 | -2,641 | -813 | -272 |
| FY25 | 2,911 | -2,173 | -936 | -198 |
Key Highlights:
- Robust cash from ops (₹2,900+ Cr avg)
- Investing cash outflows = infra + AI bets
- Net cash position mildly negative, but controlled burn
9. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 55.2% |
| ROCE | 14.8% |
| Debt/Equity | ~4.35x |
| OPM | 20% |
| EPS | ₹64.43 |
| Dividend Yield | 1.45% |
| Working Capital Days | -41 |
Verdict? Sexy margins, stressy leverage. But they’re spinning off non-core assets to clean this up.
10. P&L Breakdown – Show Me the Money
| Metric (₹ Cr) | FY25 |
|---|---|
| Sales | ₹23,109 |
| Operating Profit | ₹4,569 |
| Other Income | ₹1,033 |
| Interest | ₹729 |
| Depreciation | ₹2,592 |
| Profit Before Tax | ₹2,281 |
| Net Profit | ₹1,837 |
YoY PAT Growth: +89% — This is no small bounce-back.
11. Peer Comparison
| Company | Sales (₹ Cr) | PAT (₹ Cr) | ROE | P/E | OPM |
|---|---|---|---|---|---|
| Bharti Airtel | 1,72,985 | 27,731 | 28.3% | 41.8x | 53.8% |
| Bharti Hexacom | 8,547 | 1,340 | 25.4% | 66.1x | 49.1% |
| Tata Comm | 23,109 | 1,837 | 55.2% | 37.2x | 20% |
| Vodafone Idea | 43,571 | -27,383 | – | – | 41.6% |
| TTML | 1,308 | -1,281 | – | – | 43.6% |
Tata Comm punches above its revenue weight in profitability. If OPMs expand, this comparison chart gets explosive.
12. Miscellaneous – Shareholding, Promoters
- Promoter Holding: 58.86% (unchanged since FY23)
- FIIs: 16.99%
- DIIs: 14.51%
- Public Holding: Only ~9.6%
- Dividend Payout: 39%
Noteworthy: Stable promoter stake, rising institutional interest. Public float is tight—can cause price spikes.
13. EduInvesting Verdict™
Tata Communications is the telecom phoenix that didn’t just rise from the ashes—it laid fiber beneath them. It’s not your average telco anymore—it’s morphing into a cloud infra + AI + network-as-a-service behemoth.
Yes, the book value is laughably low for a ₹1700+ stock. But if you believe digital infrastructure is the oil rig of the AI era—this is Exxon with 1,000 TB pipes.
Keep watching the triggers: subsea capex completion, AI rollout adoption, and B2B SaaS monetization. If those hit, it’s not just a story stock, it’s a category creator.
Metadata
– Written by EduInvesting Team | 15 July 2025
– Tags: Tata Group, Telecom, Cloud Infra, Subsea Cables, AI Stocks, Digital Transformation, Tata Communications, Tech Infra
