Tata Communications (TATACOMM) Q2 24/25 earnings summary

Executive summary

• Consolidated Q2 FY25 revenue grew 18.4% year-on-year to ₹5,767 crore, driven by data and digital portfolios, with digital revenue up 52.4% YoY and now 46% of data revenue.

• EBITDA improved 10% year-on-year to ₹1,117 crore, but margin declined by 140 bps to 19.4%; PAT up 3% YoY to ₹227 crore.

• Order book increased over 25% year-on-year, with international region achieving its highest quarterly order booking in five years.

• Strategic wins and expanded order book, with continued focus on digital transformation and land monetisation to support future growth.

• Asset monetization strategy advanced with shareholder approval sought for Ambattur land sale, expected to yield INR 750-850 crores.

Financial highlights

• Q2 revenue: INR 5,767 crores; Data revenue: INR 4,834 crores (21% YoY, 3% QoQ); Digital services: INR 2,221 crores (52.4% YoY, 3.6% QoQ).

• Total income for the quarter ended September 30, 2024, was ₹5,781.47 crore, up from ₹4,897.86 crore last year.

• EBITDA margin at 19.4%; net debt at INR 10,483 crores; net debt/EBITDA at 2.37x.

• FCF for the quarter was negative INR 194 crores, improved from previous quarter due to working capital changes.

• ROCE at 16.4%, down 110 bps QoQ; cash CapEx at INR 447 crores.

Outlook and guidance

• EBITDA margin ambition remains at 20% for FY25; long-term target to return to 23-25% in two years.

• Management remains optimistic about future growth, driven by adoption of digital solutions and strategic asset repositioning.

• Digital portfolio expected to drive growth, with focus on new products and international expansion.

• Asset monetization and capital allocation to support growth and reduce leverage.