Brief company history:
Tata Communications was incorporated on March 19, 1986 as VSNL. In February 2002, the Government of India, as per their disinvestments plan, sold 25% of their holding in the company to the strategic partner. Consequently, the company was taken over under the administrative control of TATA.
What is data center:
As per International Business Machines Corporation (IBM) a data center is a physical room, building or facility that houses IT infrastructure for building, running, and delivering applications and services, and for storing and managing the data associated with those applications and services.
What the chart indicates:
At the time of writing this article the stock is yet in uptrend is trading at Rs 1801, Let’s have a look at the current chart of stock,
The price has a found the support zone around the 61.8% Fibonacci levels and after staying below 200 SMA for few days the stock is again showing strength and now is trading above 200 SMA.
Business Overview:
Ø Tata Communications Ltd, a subsidiary of the esteemed Tata Group, stands tall as a key player in India’s data Center landscape.
Ø The company offers a wide range of services including data center colocation, managed hosting, cloud services, and connectivity solutions.
Ø Leveraging its extensive global network infrastructure, Tata Communications delivers seamless connectivity and reliable data management solutions to businesses across various industries.
Ø It is the leading global digital ecosystem enabler. It has a leadership position in emerging markets, and an infrastructure that spans the globe.
Ø It delivers managed solutions to multinational companies and service providers. It partners with 300 of the Fortune 500 companies with their state-of the-art solutions, including a wide range of communication, collaboration, cloud, mobility, connected solutions, network and data center services.
Key metrics: Let’s have a look at the main key metrics of the company:
|
Current Price |
Rs 1,801 |
|
Market Cap |
Rs 51,452 Cr |
|
PE |
47.6 |
|
PEG |
0.65 |
|
Debt to Equity |
6.30 |
|
Operating Profit |
20.2% |
|
Book Value |
62.7 |
|
Promoter Shareholding |
58.9% |
|
DII Holding |
13.1% |
|
FII Holding |
18.2% |
Pros: The company has showed a decent ROE of 65% and ROCE of 24 % in last FY. in the last three years. Strong FII and DII presence in the shareholding further boosts the investor confidence.
Cons: Reserves of Rs 1501 Cr against debt of Rs 11263 Cr. The Debt to Equity ratio of the company is huge 6.30 but the company is a subsidiary of a great Tata Group, renowned for its integrity, reliability, and diversified business portfolio.
Data Center Industry in India:
Ø India’s digital transformation has accelerated the growth of the data Center industry.
Ø With the increasing adoption of cloud computing, IoT, and big data analytics, the demand for data storage and processing facilities has surged.
Ø The industry is witnessing substantial investments from both domestic and international players to meet the growing data requirements of businesses and consumers.
Tata Communications: A Global Opportunity:
Ø Tata Communications’ reach extends far beyond the borders of India, tapping into the global data Center market.
Ø With a presence in over 200 countries and territories, the company caters to the diverse needs of multinational corporations, enabling them to establish a strong digital footprint worldwide.
Ø As businesses increasingly embrace digitalization and expand their operations globally, Tata Communications is well-positioned to capitalize on this trend and drive further growth.
Possible Roadblocks for the Data Center Industry in India:
Ø Despite the promising growth prospects, the data Center industry in India faces several challenges. Regulatory hurdles, including land acquisition and environmental clearances, can delay the establishment of new data center facilities.
Ø Ensuring robust cybersecurity measures and compliance with data protection regulations poses another significant challenge for industry players.
Future Prospects:
Ø Looking ahead, Tata Communications is poised for continued growth, fuelled by the increasing demand for data storage and processing capabilities.
Ø The company’s strong financials, coupled with its strategic partnerships and global footprint, position it as a frontrunner in the data Center market.
Ø Investors can benefit from Tata Communications’ stability and growth potential, backed by the solid reputation and financial backing of its parent company, the Tata Group.
Competitive edge:
Ø Tata Communications holds a competitive edge over its peers in the data Center industry.
Ø Its affiliation with the Tata Group, renowned for its integrity, reliability, and diversified business portfolio, instils trust and confidence among
customers and investors alike.
Ø While there are other players in the Indian data Center market such as NTT Global Data Center, STT GDC, and Netmagic Solutions, Tata Communications’ extensive network infrastructure and global reach set it apart, enabling the company to offer unparalleled connectivity and scalability to its clients.
The Multibagger takeaway:
When we look the data center industry in India which is yet in its budding face, Tata Communications Ltd emerges as a pivotal player in India’s data Center ecosystem, poised to capitalize on the burgeoning digital economy both domestically and internationally.
With its robust business model, global presence, and the backing of the Tata Group, Tata Communications stands as a beacon of innovation and reliability in the ever-evolving world of data management and connectivity. Investors can look this stock as long term investment bet for creating wealth.
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Disclaimer: We are not a SEBI registered analyst, please do your own research and consult your financial advisor before taking any investment decision. Indianmultibaggers will not be responsible for any loss in future. The prices and data may vary according to the market forces at the time of reading this article.