Tata Communications Limited

Communication Services — Telecom Services · NSE

₹1,744.00−₹19.70 (−1.12%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, short-term liabilities exceed short-term assets.

In simple words: Strong business and financial position, with modest growth. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

The 60-second version of Tata Communications Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Tata Communications Limited operates as a communications technology company worldwide.

IndustryTelecom Services

SectorCommunication Services

Employees6,046

Annual revenue₹24,783 Cr

How does it make money?

Turns over ₹24,783 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹21 left at the operating level before interest, tax and depreciation. Each of its 6,046 employees supports ₹4.10 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹4.10 Cr

Who are its competitors?

The closest listed comparisons in its industry are BHARTI AIRTEL LIMITED, VODAFONE IDEA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 15.3% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE20.2%

What is the outlook?

10 analysts covering the stock expect revenue to grow about 10.1% and earnings to grow about 38.5% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+10.1%

Est. earnings growth+38.5%

Analysts10

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +39% while net margin moved -60% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+39%

Margin effect-60%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 45.1x is demanding — it needs sustained high growth to justify
✗ P/E is 47% above its own historical median of 30.6x — expensive by its own standards
✗ P/B of 14.62x is a steep premium to book

Quality vs. Valuation

Company Quality

49/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

31/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

45.1x

3Y Median

30.6x

40 monthly readings · mean 36.7x · range 20.9x–62.9x

Sector Median

21.7x

median of 2 sector peers

⚠️Current valuation is approximately 47% above its 3y median of 30.6x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 108% above the peer median of 21.7x.

vs. its own history

Expensive

30.6x median over 40 months · +47%

vs. sector peers

Expensive

21.7x median of 2 peers · +108%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

11.9x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 118.3% to 29.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 23.2% to 15.3% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 2 high · 3 watch

🔴High leverageFinancial
Debt/Equity of 3.71x — earnings must service borrowings before shareholders see anything.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.5 points, from 26.3% to 20.8%.
🟡Debt is increasingFinancial
Total debt is up 43% over 3 years.
🟡Profit is decliningFinancial
Net profit is down 44% over 3 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.51 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 26.3% to 20.8%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 3.71x. Interest is payable whether or not the business has a good year.
The price already assumes success
The stock trades 47% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 118.3% to 29.1%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 11.6% CAGR
Latest reported year was 9.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 19%✓ 20.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Interest cover stays above 3x✗ 2.9x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹2,046 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

7 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹49,719 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

45.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

14.62x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹38.66

Profitable

Profitable on a per-share basis

ROE

33.8%

Strong

Strong capital efficiency

ROCE

15.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

3.71x

High

High leverage

Revenue Growth (YoY)

9.6%

Modest

Modest growth

Profit Growth (YoY)

86.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.00%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹1,443 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

22.3x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

4.9%

Average

Average asset productivity

Operating Margin

10.2%

Average

Average margins

Net Margin

4.2%

Average

Average bottom-line conversion

Current Ratio

0.51

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.82

Market-like

Moves roughly in line with the market

52W Range Position

54%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1687.2 / 1710.0

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

64.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹17,838 Cr	₹20,785 Cr	₹22,989 Cr	₹24,783 Cr	+11.6%
EBITDA	₹4,693 Cr	₹4,680 Cr	₹4,829 Cr	₹5,157 Cr	+3.2%
EBITDA Margin	26.3%	22.5%	21.0%	20.8%	—
PAT (Net Profit)	₹1,796 Cr	₹968 Cr	₹1,836 Cr	₹1,002 Cr	-17.7%
EPS	₹63.01	₹33.96	₹64.35	₹35.09	-17.7%
ROE	118.3%	54.2%	60.8%	29.1%	—
ROCE	23.2%	17.9%	19.9%	15.3%	—
Total Debt	₹8,577 Cr	₹11,263 Cr	₹12,357 Cr	₹12,249 Cr	+12.6%
Free Cash Flow	₹2,891 Cr	₹1,100 Cr	₹705 Cr	₹2,046 Cr	-10.9%

🟢 Revenue has grown at 11.6% a year over 3 years.

🟢 EBITDA has grown at 3.2% a year over 3 years.

🔴 EBITDA Margin has fallen from 26.3% to 20.8% over 3 years (-5.5 pts).

🔴 PAT (Net Profit) has shrunk at 17.7% a year over 3 years.

🔴 EPS has shrunk at 17.7% a year over 3 years.

🔴 ROE has fallen from 118.3% to 29.1% over 3 years (-89.2 pts).

🔴 ROCE has fallen from 23.2% to 15.3% over 3 years (-7.9 pts).

🔴 Total Debt has grown at 12.6% a year over 3 years.

🔴 Free Cash Flow has shrunk at 10.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹28,404 Cr

Total Liabilities

₹24,753 Cr

Cash & Equivalents

₹642 Cr

Operating Cash Flow

₹4,479 Cr

Capex

-₹2,433 Cr

Shareholding (proxy)

Institutional Holding

25.4%

Insider Holding

60.5%

Corporate Actions

Next Earnings

15 Oct 2026

Dividend Rate

₹17.5

Ex-Dividend Date

19 Jun 2026

Analyst Consensus

Recommendations

8 Buy · 2 Hold · 1 Sell

Target Price (Mean)

₹2,129

+22.1% vs CMP

Target Range

₹1,850 – ₹2,600

Peer Comparison

Company	P/E	ROE
BHARTI AIRTEL LIMITED	39.8x	20.2%
VODAFONE IDEA LIMITED	3.6x	—

Recent News

5 positive1 mixed

Earnings Beat: Tata Communications Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Simply Wall Street, 18 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Tata Communications Q2 results: Net profit jumps 86% YoY to Rs 341 crore; revenue rises 10%

The Economic Times, 15 OctResults