Tata Communications Q4 Results: Net profit surges 115% to ₹761 crore, revenue up 6% YoY; dividend declared

Tata Communications Q4 Results: Tata Communications announced its January-March quarter results for fiscal 2024-25 (Q4FY25) on Tuesday, April 22, reporting a jump of 115 per cent in consolidated net profit of ₹761.17 crore, compared to ₹354.57 crore in the corresponding period last year.

The Tata Group's telecom subsidiary's quarterly growth was driven by higher demand for its data services and a one-off gain by selling a Chennai land parcel to an associate company. Revenue from operations rose six per cent to ₹5,990.35 crore in the fourth quarter of FY25, compared to ₹5,645.07 crore in the year-ago period. The company declared a final dividend.

Tata Communications Q4 Results: Key Metrics

Tata Communications aims to accelerate its capital expenditures to over $300 million in FY26 from $265-270 million in FY25. Chief Financial Officer (CFO) Kabir Ahmed Shaikh told news agency PTI that even as it spends more on investments, it will expand the pre-tax profit margins and ensure they reach 23-25 per cent in two years from 19.8 per cent in the March quarter.

Shaikh said the profit margins have narrowed as compared to the October-December period. The sale of the Chennai land resulted in a gain of ₹577 crore, which helped the firm post a high jump in net profits. There was a gain of ₹311 crore by selling its entire stake in Tata Communications Payments Solutions.

Tata Communications is also mulling stake dilution to a loss-making foreign subsidiary under the data services vertical. The arm lost ₹105 crore on a revenue of ₹33 crore in FY25. The CFO said the company is also likely to defer its ambition of doubling revenues in two years, which was announced in January. The revised timeline will be disclosed on investor day.

In January this year, it announced its aim to double revenues to ₹28,000 crore by FY27. It closed FY25 with a topline of ₹23,238 crore. Shaikh said the capital expenditure will focus on maintenance-related expenses that are capped at under two per cent of revenues, customer successes, and strategic capex on aspects like an undersea cable or cloud platform.

As of March 31, the company's overall debt stood at ₹9,377 crore, and it is planning to reduce the net debt-to-pre-tax-profit ratio to under two times by September 2024. A 16.4 per cent jump in network and transmission-related spending pushed its total expenses up by six per cent.

Tata Communications, which provides enterprises with data connections and cybersecurity services, has been reorganising its structure and monetising non-core assets to sharpen its focus on core operations as it seeks a bigger share of the highly competitive cloud, networking services, media, and entertainment market. These steps "allow us to enter fiscal year 2026 with a focus on core and growth capital to invest," said Shaikh.

Tata Communications dividend

Tata Communications' board approved a final dividend of 250 per cent to ₹25 per share for FY25. The final dividend is subject to the approval of the company's shareholders. Tata Communications has declared 22 dividends since August 13, 2003. In the past 12 months, Tata Communications has declared an equity dividend of ₹16.70 per share.

"The Board of Directors recommended a final dividend of ₹25.00 per share [250 per cent] (face value of ₹10 each) for the financial year ended March 31, 2025. If approved at the ensuing Annual General Meeting, the dividend shall be paid to eligible shareholders thereafter," said Tata Communications in a regulatory filing to the stock exchanges on Tuesday.

On Tuesday, shares of Tata Communications Ltd settled 1.48 per cent to ₹1,597.85 before hitting an intraday high of ₹1,617 apiece on the BSE. Shares rose over two per cent in one month and shed eight per cent year-to-date (YTD).