Tata Communications rings a new tune

Tata Communications had closed yesterday at Rs.714.05 and today, it opened higher at Rs.721.80, going up to an intra day high at Rs.722.50. It is now just about holding on to the gains at Rs.715.50, indicating investors just want to book profits at every rise and exit.

The news is good from the company; something which the company has been wanting to do for a long time, over 15 years now. The company has got the approval to hive off its property holdings into a separate company, which will subsequently be listed.

Analysts have pegged the value of its 773 acres of land parcels at around Rs.7500 crore and once this takes off, this could help change the dwindling fortunes of the company.

This land parcel consists of prime land, which belonged to VSNL then, which divested the Govt’s stake in favour of the Tata group in 2002.

The company, for Q2FY18 had posted a consolidated loss of Rs250 crore v/s profit of Rs.40 crore (YoY). Its revenue declined 7.31% to Rs4,218 crore. The company had explained, “additional provision of Rs186 crore as per the contractual obligation to Tata Sons on the Tata Teleservices investment and due to other one-time exceptional provisions of Rs27 crore” led to the negative net profit.

The company has been consistently selling its non-core assets to bring down debt and at end of Q2FY18, debt stood at Rs.8800 crore v/s Rs.14230 crore at end of FY17.