Tata Communications (TATACOMM) Q1 24/25 earnings summary

Executive summary

• Consolidated revenues for Q1 FY25 grew 18.1% year-over-year to ₹5,633 crore, with data revenues up 20% and digital portfolio revenue surging 51.5% year-over-year, now comprising 45.7% of data revenue.

• EBITDA increased 9.8% year-over-year to ₹1,124 crore, with margins at 20%, up 140 bps quarter-on-quarter but down 150 bps year-over-year.

• PAT for Q1 FY25 was ₹333 crore, with a PAT margin of 5.9%, up 3.6% quarter-on-quarter but down 12.8% year-over-year.

• Integration of Switch and Kaleyra completed, now reporting only consolidated numbers; all business segments reported healthy year-over-year growth.

• Digital services and data growth expected to continue, with strong order book and healthy sales funnel.

Financial highlights

• Q1 FY25 consolidated revenues: ₹5,633 crore, up 18.1% year-over-year, down 1% sequentially.

• Data revenues: ₹4,694 crore, up 20% year-over-year, up 0.8% quarter-on-quarter.

• Digital portfolio revenue: ₹2,144 crore, up 51.5% year-over-year, now 45.7% of data revenues.

• PAT: ₹333 crore, PAT margin 5.9%, up 3.6% quarter-on-quarter, down 12.8% year-over-year.

• Free cash flow: negative ₹385 crore, mainly due to working capital increase and advance payments.

• Net debt: ₹9,611 crore; net debt/EBITDA at 2.2x.

• ROCE: 17.5%, down 883 bps year-over-year and 130 bps quarter-on-quarter due to increased capital employed from Kaleyra acquisition.

Outlook and guidance

• Targeting to maintain EBITDA margins at 20% for the year, with aspirations to reach 23%-25% medium-term.

• Confident in doubling data revenues by FY27, leveraging synergies from acquisitions and organic investments.

• Expecting margin improvement as operating leverage and cost synergies materialize.

• Digital services and data growth expected to continue, with strong order book and healthy sales funnel.

• The company remains bullish on market opportunities and confident in achieving medium-term growth objectives.