On this page ▾
The market expects much less from Tata Communications than it has delivered before.
At today’s share price, buyers are assuming Tata Communications grows about 0% a year, forever. Over the last ten years it actually grew about 9% a year. That is a big step down from its own record — in other words, that it stops growing altogether. Either the market can see a problem that the published accounts do not show yet, or it is expecting a slowdown that has not happened.
- How it is valued: Discounted cash flow.
- What the price assumes: 0% growth, against 9% the model takes from its own record.
- Ten-year record: Between FY2018 and FY2026, Tata Communications' revenue went from ₹16,651 crore to ₹24,803 crore — it compounded at about 5% a year over 8 years.
- Biggest swing factor: Digital services. Main risk: Execution.
01From VSNL to a global network company
Tata Communications began as Videsh Sanchar Nigam (VSNL), India's state-owned international telecom carrier, which the Tata group took over in 2002.
It now owns one of the world's largest subsea cable networks and sells connectivity, cloud, security, collaboration and IoT services to large companies worldwide.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the growth that price implies for Tata Communications, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03Tata Communications' record, in plain numbers
Between FY2018 and FY2026, Tata Communications' revenue went from ₹16,651 crore to ₹24,803 crore — it compounded at about 5% a year over 8 years. It reported a net loss in FY2018, FY2019 and FY2020, and closed the period with net profit of ₹997 crore. In FY2026 it kept 4.0% of revenue as net profit — against a low of -2.0% in FY2018 and a high of 10.1% in FY2023. The latest year added 7.3% to revenue, close to its own long-run pace.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2018 | 16,651 | -326 | -2.0% |
| FY2019 | 16,525 | -80 | -0.5% |
| FY2020 | 17,068 | -85 | -0.5% |
| FY2021 | 17,100 | 1,252 | 7.3% |
| FY2022 | 16,725 | 1,485 | 8.9% |
| FY2023 | 17,838 | 1,801 | 10.1% |
| FY2024 | 20,969 | 970 | 4.6% |
| FY2025 | 23,109 | 1,837 | 7.9% |
| FY2026 | 24,803 | 997 | 4.0% |
04How Tata Communications gets valued — and why
Discounted cash flowThis business is valued on the cash it is expected to generate, discounted back at its cost of capital — with growth taken from its own ten-year record rather than from guidance.
05What decides Tata Communications' value
Digital services
Faster-growing cloud and security services.
Core connectivity
Steady but slow-growing network revenue.
Margins
Investment in new services weighs on margins for now.
Debt
Borrowing affects returns.
06What could go wrong
- Execution. New digital businesses need scale.
- Price pressure. Voice and data transport prices keep falling.
- Competition. Global cloud and network providers.
07What the full Tata Communications valuation shows
Sign in free to see the complete Tata Communications valuation
- ✓Fair value per share — from a ten-year discounted cash flow, every step shown
- ✓The Workbench — change revenue growth, the discount rate or terminal growth and watch Tata Communications' value move
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against Bharti Airtel, Indus Towers and Vodafone Idea
- ✓Downloadable report — the full write-up, yours to keep
08Questions people ask about Tata Communications
What was Tata Communications called before?
Videsh Sanchar Nigam Ltd (VSNL).
What does Tata Communications sell?
Global connectivity, cloud, security and collaboration services for businesses.
Does Tata Communications own subsea cables?
Yes, one of the world's largest subsea cable networks.
Is Tata Communications overvalued?
At ₹1,773 the market is pricing in roughly 0% sustained growth, against the ~9% its own record supports. That is less than it has delivered — on these numbers the market is asking the business for less than its own record, which usually means it doubts the record repeats.
What is the intrinsic value of Tata Communications?
It is computed from the filed financial statements using the method that fits this business (discounted cash flow), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
How much debt does Tata Communications carry?
Debt to equity stands at 2.09, down from 4.88 at the start of the period — the balance sheet is a core input to the cost of capital used here.