Tata Communications shares fall 7 per cent after CEO meet

Tata Communications shares fall 7 per cent after CEO meet

After the firm held an investor meeting in June 2022, Tata Communications' shares fell over 7 per cent. Tata Communications stock hit a 52 week low of Rs 856, losing 7.12 per cent in early trade against BSE's previous close of Rs 921.65.

The previous target of Rs 1,440 was changed by CLSA, which cut its target price to Rs 1,070.

Management's margin guidance is 23 per cent to 25 per cent with Capex guidance of $300 m. However, there was no specific revenue growth guidance, according to CLSA.

The stock, which forms part of the ace investor Rakesh Jhunjhunwala's portfolio, was trading 2.57 per cent lower at Rs 898 in the afternoon session.

Rakesh Jhunjhunwala invested in the company through his wife Rekha Jhunjhunwala. As per the shareholding pattern of Tata Communications for the quarter ended March 2022, Rekha Jhunjhunwala had 30,75, 687 shares or a 1.08 per cent stake in the company.

The stock of Tata Communications has fallen for the last four sessions.

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Tata Communications shares are trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

The stock has fallen 32.04 percent in a year and lost 38.54 percent this year. It was at a 52 week high of Rs 1,590 on January 17, 2022.

The management guided double-digit growth at its analyst meet to highlight its new age capabilities and growth opportunities, but also indicated that the near-term order-to- revenue cycle continues to be stretched, said Motilal Oswal, financial services firm.

We expect a 16 per cent EBITDA CAGR over FY 22 -- 2 E. A revival in growth will be key to a better valuation. Motilal Oswal said we maintain our Neutral rating.

The stock has a 19 per cent upside, compared to the current market price of Rs 922, according to the report.

ICICI Securities maintained a buy call for the stock with a target price of Rs 1,600, a 73 per cent increase from the current market price of Rs 921.

Tata Communications held its annual investor day on June 14, 2022, sharing lead indicators that helped appreciate the company's efforts to drive revenue growth, which was constrained by externalities, including the supply of equipment.

It stated that the company will continue adding to funnel and improve conversion, which should help speed up revenue growth as supply normalises. In FY 22, revenue growth was disappointing, but we continue to believe that management strategy is anchored in driving faster and durable growth. Our estimates remain the same with target price at Rs 1,600 20 x FY 24 E P E Maintain BUY, said ICICI Securities.