Near-term growth challenges to weigh on Tata Communications stock

Higher investments may cap margins in the near term

The stock of Tata Communications was the biggest loser in trade among the BSE 200 stocks on Wednesday, shedding over 5 per cent. The pressure on the stock of the communication solutions provider came amid growth and margin challenges in the near term. The lack of growth guidance for FY23 and downgrades also hit investor sentiment.

The company has stuck to its double digit revenue growth guidance for the data segment in the medium to long term. It has also maintained its medium term return on capital employed (ROCE) target of 25-30 per cent and operating profit margin goal of