01 — At a Glance
The Global Plumber Running on Ambition & Debt
- 52-Week High / Low₹2,004 / ₹1,361
- Q3 FY26 Revenue₹6,189 Cr
- Q3 FY26 PAT₹364 Cr
- Q3 FY26 EPS₹12.82
- Annualised EPS (Q3×4)₹51.28
- Book Value₹99.9
- Price to Book14.6x
- Dividend Yield1.72%
- Debt / Equity4.68x
- Net Debt / EBITDA2.16x
The Roast Begins Here: Tata Communications is the telecom world’s equivalent of a startup pretending to be a pension fund. ₹6,189 crore quarterly revenue. ₹364 crore PAT. Owned and operated the world’s only wholly-owned fibre optic subsea ring. Partners with 300 Fortune 500 companies. And yet — P/E of 36x, ROCE of just 15%, and digital margins that make loss-making startups look disciplined. They acquired Kaleyra (CPaaS) for a whale of a price. Now they’re acquiring Commotion (AI) to save face. The stock returned -9.15% in 6 months. Meanwhile, the CFO just resigned. Again.
02 — Introduction
Where Global Connectivity Meets Silicon Valley Delusions
Tata Communications is a 1986 baby (originally VSNL) that got acquired by the Tatas in 2002 and transformed into a global telecom infrastructure provider. They own subsea cables. They run data centres. They pipe international voice traffic. And for the last 3 years, they’ve been trying to become a SaaS company.
The strategy, on paper, makes sense. Core Connectivity (44% of DMS revenue) is mature, stable, 3-4% growth, but rock-solid margins of ~44%. Digital Portfolio Services (56% of DMS revenue) is supposed to be the growth machine — Cloud, Security, AI, CPaaS (Kaleyra), Media (Switch). But in Q3 FY26, digital grew 15% YoY and 4.6% QoQ… while net revenue actually declined. Translation: they’re making less money per rupee of digital revenue.
The board just picked Ganesh Lakshminarayanan as the new MD (effective April 2026). Current MD A.S. Lakshminarayanan is stepping down. CFO Kabir Ahmed Shakir resigned on Feb 3, 2026. CFO replacement Siddharth Mundra is coming May 1. Three executives in 45 days. Meanwhile, they just bought a 51% stake in Commotion Inc. for ~₹227 crore, an AI-native enterprise SaaS platform. The thesis: bolt AI onto the digital stack and finally reach profitability.
Let’s find out if the plumbing will hold up, or if the foundation is rotting while they paint the walls.
Concall Note (Jan 2026): “We are walking and chewing gum at the same time. We’re doing repairs with the mains on as far as the digital portfolio is concerned.” — CFO Kabir Ahmed Shakir, Q3 FY26 earnings call. Translation: we bought Kaleyra, got a contract worse than the last guy, exited it, and now we’re still bleeding.
03 — Business Model: Global Plumbing with SaaS Delusions
They Own The Pipes. They Just Want To Sell You Software Too.
Tata Communications is fundamentally an infrastructure company that’s pretending to be a software company. The infrastructure part is real. They own and operate the world’s only wholly-owned fibre optic subsea ring that carries ~1 in 10 international calls. They have relationships with 7,000+ telecom partners, 300+ Fortune 500 companies, and a presence in 190+ countries. Think of them as the FedEx of data — they physically move stuff, route it globally, and make money on reliability and scale.
Revenue is split three ways: Data Managed Services (~84% of revenue), Voice Services (legacy wholesale voice, declining), and Real Estate (boring). Within DMS, they’ve split the narrative into Core Connectivity (the reliable part) and Digital Portfolio Services (the future, allegedly).
Core Connectivity = Traditional stuff. Private lines, point-to-point connectivity, WAN, VPN. Growing at 4.2% YoY. Margins at ~44%. Recurring revenue. No drama. Problem: markets are efficient; everyone has fibre now.
Digital Portfolio = The bet. Cloud (they have Vayu, an enterprise cloud). Security (managed SASE, threat protection). Collaboration (Kaleyra acquired in FY24 for CPaaS). Media (they bought Switch in FY24 for managed media services, lost money on it). IoT. All growing, all losing money. Net revenue (gross minus commissions, costs) is sometimes declining even when gross revenue grows. Because they’re signing deals with bad unit economics to hit growth targets.
Data Revenue₹5,336 Cr84% of total
Digital Mix49.6%of Data revenue
Voice GrowthDecliningLegacy business
Geographies190+Countries covered
The Honest Take: If Core Connectivity is the pension fund, Digital is the venture arm. And venture arms at telecom companies typically burn cash while pretending otherwise. TCL is trying. They have strategic acquisitions (Kaleyra for voice AI, Commotion for platform AI). They have product launches (ThreadSpan for network management, EDP for edge distribution). But the math is breaking. Digital at 49.6% of revenue. Digital growing 15%. And digital net revenue still declining. That’s not a scaling business. That’s a business buying growth.
💬 What’s your take: Can a 40-year-old telecom plumber truly become a SaaS company? Or is this the classic “we acquired our way to complexity” story?
04 — Financials Overview
Q3 FY26: Growth Up. Profitability All Over The Place.
Result type: Quarterly Results (Q3 ending Dec 31, 2025) | Q3 FY26 EPS: ₹12.82 | Annualised EPS (Q3×4): ₹51.28 | Full-year FY25 EPS: ₹64.43 (but includes one-time gains)
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 6,189 | 5,798 | 6,100 | +6.7% | +1.5% |
| EBITDA | 1,228 | 1,181 | 1,174 | +4.0% | +4.6% |
| EBITDA Margin % | 19.8% | 20.4% | 19.2% | -60 bps | +60 bps |
| PAT | 364 | 236 | 183 | +54.2% | +98.9% |
| EPS (₹) | 12.82 | 8.28 | 6.42 | +54.8% | +99.7% |
The Honest Commentary: PAT jumped 54% YoY and 99% QoQ. Celebrate? Hold your horses. The CFO mentioned they’re taking ₹61 crore labour code provision this quarter. They also got interest refunds from I-T. And there was a one-time accounting reclassification on an IRU deal. Strip the noise, core operations grew 4-6%. That’s fine. But the stock is at 36x P/E on annualised ₹51.28 EPS (based on Q3×4). That assumes every quarter delivers like Q3. Spoiler: they won’t. Full year FY25 EPS was ₹64.43 (including gains). This year tracking to ₹50-55 range. That’s not growth. That’s management trying to hide an earnings decline under noise.
05 — Valuation: Fair Value Range
Is This A Global Infrastructure Play Or A Digital Startup Pretending?
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