Margin pressures, revenue worries may hit Tata Communications' prospects

Operating profit margins of TATA communications fell by 135 basis points to 24.5% due to a jump in costs, which were back-ended

A muted near-term outlook, a double-digit cut in earnings growth estimates after a weak operating performance in the March quarter (Q4FY22) weighed on the stock of Tata Communications. It was down about 14 per cent since Tata Communications results last Thursday evening.

While the company’s consolidated revenue performance was in line with the street’s expectations, rising 1.9 per cent on a sequential basis, its operating profit disappointed falling 3.4 per cent. This was the second consecutive quarter of decline and the figure came 6-9 per cent lower than what analysts were working with.

Operating profit margins fell by