Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Communications (TCOM)
Telecom
3QFY12 revenues in line revenues, margins disappoint a tad. TCOM posted 7%
qoq and 19% yoy growth in consolidated revenues to Rs36 bn, in line with our
estimate. Growth was led by global voice services, partly aided by Rupee depreciation.
Voice-led revenue growth, however, took a toll on OPM: EBITDA margin declined 30
bps qoq versus our expectation of a 40 bps increase. Stock remains a surplus-landnewsflow
play. We shall review our estimates post TCOM’s earnings call on January 30.
3QFY12 revenues meet estimates, margins disappoint
TCOM reported a decent quarter with revenue growth of 7% qoq and 19% yoy to Rs36 bn but
EBITDA of Rs5 bn fell short of our estimate of Rs5.3 bn. EBITDA margin declined 30 bps qoq to
13.9%; our expectation was a 40 bps jump. We note that revenue growth as well as margin
should have benefited from the Rupee depreciation. EBITDA performance was disappointing, in
that light. Even as we await the company’s earnings call (on January 30) for more details, we
believe voice-led revenue growth impacted the company’s margin performance in the quarter.
We discuss the limited available segment data below.
Segmental performance: Voice drives growth, Neotel flat
TCOM’s 3QFY12 revenue growth was led by the global voice segment, which grew 10% qoq.
Data revenue growth was slower at 8% qoq while Neotel revenues declined 5.7% qoq. Factoring
in the sharp (nearly 11%) depreciation in the INR/USD rate, the underlying constant currency
revenue growth in the voice and the data segments was likely modest. Management also indicated
that the decline in Neotel revenues qoq in Rupee terms was currency-driven; underlying constant
currency revenues were flat qoq – even this disappointed us, given the management’s guidance of
sustained improvement in Neotel financials.
Movements in below EBITDA line items a tad surprising
We were a tad surprised and would seek clarity from the management at the earnings call on a
couple of below-EBITDA line items: (1) net interest expense declined 26% qoq to Rs1.9 bn versus
Rs2.6 bn in 2QFY12. Interest rates did not soften during the last quarter and interest on FC loans
would have been adversely hit by the Rupee depreciation, in our view, and (2) profit at the
minority interest level – minority interest charge of Rs269 mn for 3QFY12 versus positive Rs730 mn
for 2QFY12 suggests that one or more of the partly owned subsidiaries moved from loss to profits
in 3QFY12; we are surprised with this movement given that Neotel is still making losses, in our
view. The company’s disclosures suggest that Neotel made losses at the EBIT level in 3QFY12.
Exhibit 2 gives our SOTP for TCOM.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Communications (TCOM)
Telecom
3QFY12 revenues in line revenues, margins disappoint a tad. TCOM posted 7%
qoq and 19% yoy growth in consolidated revenues to Rs36 bn, in line with our
estimate. Growth was led by global voice services, partly aided by Rupee depreciation.
Voice-led revenue growth, however, took a toll on OPM: EBITDA margin declined 30
bps qoq versus our expectation of a 40 bps increase. Stock remains a surplus-landnewsflow
play. We shall review our estimates post TCOM’s earnings call on January 30.
3QFY12 revenues meet estimates, margins disappoint
TCOM reported a decent quarter with revenue growth of 7% qoq and 19% yoy to Rs36 bn but
EBITDA of Rs5 bn fell short of our estimate of Rs5.3 bn. EBITDA margin declined 30 bps qoq to
13.9%; our expectation was a 40 bps jump. We note that revenue growth as well as margin
should have benefited from the Rupee depreciation. EBITDA performance was disappointing, in
that light. Even as we await the company’s earnings call (on January 30) for more details, we
believe voice-led revenue growth impacted the company’s margin performance in the quarter.
We discuss the limited available segment data below.
Segmental performance: Voice drives growth, Neotel flat
TCOM’s 3QFY12 revenue growth was led by the global voice segment, which grew 10% qoq.
Data revenue growth was slower at 8% qoq while Neotel revenues declined 5.7% qoq. Factoring
in the sharp (nearly 11%) depreciation in the INR/USD rate, the underlying constant currency
revenue growth in the voice and the data segments was likely modest. Management also indicated
that the decline in Neotel revenues qoq in Rupee terms was currency-driven; underlying constant
currency revenues were flat qoq – even this disappointed us, given the management’s guidance of
sustained improvement in Neotel financials.
Movements in below EBITDA line items a tad surprising
We were a tad surprised and would seek clarity from the management at the earnings call on a
couple of below-EBITDA line items: (1) net interest expense declined 26% qoq to Rs1.9 bn versus
Rs2.6 bn in 2QFY12. Interest rates did not soften during the last quarter and interest on FC loans
would have been adversely hit by the Rupee depreciation, in our view, and (2) profit at the
minority interest level – minority interest charge of Rs269 mn for 3QFY12 versus positive Rs730 mn
for 2QFY12 suggests that one or more of the partly owned subsidiaries moved from loss to profits
in 3QFY12; we are surprised with this movement given that Neotel is still making losses, in our
view. The company’s disclosures suggest that Neotel made losses at the EBIT level in 3QFY12.
Exhibit 2 gives our SOTP for TCOM.
No comments:
Post a Comment