Shares of Tata Communications Ltd were in focus after global brokerage CLSA reaffirmed its Buy rating on the stock and retained a target price of ₹2,600, implying an upside of about 31% from the previous closing level.
The stock rose as much as 1.8% to an intraday high of ₹2,028.75, against the previous close of ₹1,991.10. The company has a market capitalization of ₹57,385 crore.
CLSA maintains positive view
CLSA believes Tata Communications is well placed to benefit from rising demand for digital infrastructure services.
Target details
- Rating: Buy
- Target price: ₹2,600
- Implied upside: About 31%
The brokerage highlighted the company’s growing exposure to cloud, cybersecurity and managed digital services.
Why is CLSA bullish?
Fast-growing digital business
Digital services are growing at around 20% annually, outpacing the company’s traditional connectivity business.
Growth is being driven by:
- Cloud networking
- Cybersecurity solutions
- Internet of Things (IoT)
- Managed services
These businesses also offer better margins than legacy operations.
Shift towards higher-margin segments
Tata Communications has been increasing the share of platform-led and digital services in its revenue mix.
According to CLSA, this transition could:
- Improve operating leverage
- Support margin expansion
- Reduce reliance on slower-growing connectivity services
Benefiting from digital transformation
Global enterprises continue to invest in:
- Cloud infrastructure
- AI workloads
- Secure networking
- Data management
With its international presence and enterprise customer base, Tata Communications is positioned to capture a part of this spending.
Can Tata Communications benefit from the AI and cloud boom?
The company provides several services that form part of the digital infrastructure ecosystem required for AI adoption.
These include:
- Enterprise connectivity
- Cloud networking
- Cybersecurity
- Managed services
- Hybrid IT solutions
Its global subsea cable network and relationships with multinational companies give it exposure to rising demand for data movement and secure cloud infrastructure.
As AI adoption accelerates, enterprises are expected to spend more on networking, security and cloud-related services, areas where Tata Communications already has an established presence.
Financial performance
Q4 FY26
- Revenue rose to ₹6,554 crore, from ₹5,990 crore a year earlier.
- Revenue growth stood at 9.41%.
However, profitability declined sharply.
- Net profit fell to ₹259 crore.
- Net profit in Q4 FY25 stood at ₹1,041 crore.
Key ratios
- ROCE: 14.7%
- ROE: 34%
- Three-year average ROE: 48.1%
- Dividend payout ratio: 45.9%
About Tata Communications
Tata Communications Ltd, part of the Tata Group, provides digital infrastructure and communication solutions to enterprises across the world.
Its offerings include:
- Global network connectivity
- Cloud solutions
- Cybersecurity services
- IoT platforms
- Managed services
The company operates one of the world’s largest subsea cable networks and serves customers across sectors including banking, media, manufacturing and technology.
TL;DR
Tata Communications gained after CLSA reiterated its Buy rating and maintained a ₹2,600 target price. The brokerage expects growth in cloud, cybersecurity and digital services to drive earnings and views the company as a beneficiary of rising AI and cloud spending.
AI Summary
- CLSA maintained a Buy rating on Tata Communications.
- The brokerage has a target price of ₹2,600.
- Digital services are growing at around 20% annually.
- Revenue rose 9.4% in Q4 FY26.
- Net profit declined to ₹259 crore from ₹1,041 crore.
