Tata Communications Q4 FY25 Net Profit Soars 115% to ₹761 Crore; Declares ₹25 Dividend

Tata Communications reported a 115% increase in its net profit for the January–March quarter of FY25, reaching ₹761.17 crore, compared to ₹354.57 crore in the same quarter last year. This growth was supported by a strong demand for its data services and a one-time gain from selling a land parcel in Chennai.

Revenue Sees Modest Rise

The company’s revenue from operations went up by 6% to ₹5,990.35 crore in Q4FY25, from ₹5,645.07 crore in the year-ago period.

Read More, Mahindra Finance Shares in Focus: PAT Slipped 32% YoY, Proposed Final Dividend of ₹6.50.

Gains from Asset Sales Boost Profits

Tata Communications earned ₹577 crore from selling the Chennai land and ₹311 crore from the sale of its entire stake in Tata Communications Payment Solutions, which significantly contributed to the quarterly profit jump.

Capex Plans for FY26

The company plans to raise its capital expenditure to over $300 million in FY26, up from $265–270 million in FY25. The focus will be on maintaining infrastructure, customer success, and strategic investments such as undersea cables and cloud platforms.

The CFO, Kabir Ahmed Shaikh, said that despite a dip in margins from the previous quarter, the company targets a margin expansion to 23–25% in 2 years, from the current 19.8%.

Possible Stake Dilution in Loss-Making Arm

Tata Communications is considering reducing its stake in a foreign subsidiary that operates in the data services segment, which reported a ₹105 crore loss on ₹33 crore revenue in FY25.

Revenue Doubling Timeline Likely to be Delayed

The company had earlier set a goal to double its revenue to ₹28,000 crore by FY27. However, with FY25 revenue closing at ₹23,238 crore, it now plans to revise this target, with more details to be shared on Investor Day.

Debt and Expenses Update

As of March 31, Tata Communications had a total debt of ₹9,377 crore. The company plans to bring down its net debt-to-EBITDA ratio below 2x by September 2024. Meanwhile, total expenses rose by 6% due to a 16.4% increase in network and transmission-related costs.

Focus on Core Business

The company is restructuring its operations and selling non-core assets to focus on key areas like cloud, networking, cybersecurity, media, and entertainment.

Dividend Declaration

The board has recommended a final dividend of ₹25 per share (250%) for FY25. If shareholders approve it at the upcoming AGM, the dividend will be paid afterward. Tata Communications has issued 22 dividends since 2003, including ₹16.70 per share in the past year.

Stock Performance

As of 10:17 AM IST on April 23, Tata Communications share price is trading at ₹1,599, up 0.019%. The stock opened at ₹1,650 and touched an intraday high of ₹1,655.30 and a low of ₹1,595. It has a market capitalisation of ₹45,570 crore, a price-to-earnings (P/E) ratio of 40.80, and a dividend yield of 1.04%. Over the past 52 weeks, the stock has reached a high of ₹2,175 and a low of ₹1,291.

Conclusion

Tata Communications has delivered a strong Q4 with a sharp rise in profitability, backed by both operational growth and strategic asset sales. While the company is revisiting its ambitious revenue targets, it remains focused on core business expansion and strengthening margins. The dividend payout further signals its commitment to shareholder returns.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.         

Investments in securities market are subject to market risks, read all the related documents carefully before investing.