Tata Communications Q4 Results: Net Profit Surge by 115%, Declares ₹25 Dividend

Tata Communications, the telecommunications subsidiary of the Tata Group, has reported the financial performance in the fourth quarter of fiscal year 2024-25 (Q4 FY25).  Currently, the share price of the company is trading at ₹1,587.50, with a decline of 0.62%.

Financial Performance Highlights

The company reported a 6% year-on-year increase in revenue from operations, reaching ₹5,990.35 crore in Q4 FY25, compared to ₹5,645.07 crore in the same quarter of the previous year. This growth was primarily driven by a 9.8% rise in revenue from its core data services segment. For the full financial year, the company posted a total revenue of ₹23,238 crore. Consolidated net profit for Q4 FY25 saw a sharp 115% surge, climbing to ₹761.17 crore from ₹354.57 crore in the corresponding quarter last year.

Drivers and One-Off Gains

However, the substantial jump in net profit was significantly aided by one-off gains. These included a gain of ₹577 crore from the sale of a Chennai land parcel to an associate company, and a further gain of ₹311 crore from selling its entire stake in Tata Communications Payments Solutions. Without these exceptional items, profit margins were noted to have narrowed compared to the preceding October-December period.

Moreover, the quarterly growth was also driven by higher demand for its data services. Tata Communications provides services such as data connections and cybersecurity to enterprises.

Strategic Outlook and Capital Allocation

Tata Communications plans to raise capital expenditure to over $300 million in FY26, up from an estimated $265–270 million in FY25. The increased spend will prioritise core growth areas such as undersea cables and cloud platforms, while maintenance costs will remain capped at under 2% of revenue. Despite higher investments, the company targets expanding pre-tax profit margins to 23–25% over two years, from 19.8% in Q4 FY25. It is also restructuring its operations and monetising non-core assets to focus on cloud, networking, media, and entertainment services.

In January, the company announced its aim to double revenue to ₹28,000 crore by FY27. However, the CFO - Mr. Kabir Shaikh indicated that the company is expected to defer on this goal, with an updated timeline set to be announced during the upcoming investor day. 

Additionally, the firm is considering stake dilution in a loss-making foreign subsidiary, which posted a ₹105 crore loss on ₹33 crore revenue in FY25.

Dividend Announcement

The board has recommended a final dividend of 250 per cent, or ₹25 per share, for the financial year ended March 31, 2025. This final dividend is contingent on approval from the company's shareholders at the upcoming Annual General Meeting.

Market Reaction

On Tuesday, 22 April 2025, shares of Tata Communications Ltd settled 1.48 per cent higher at ₹1,598.70 on the BSE, ahead of the results announcement. The stock reached an intraday high of ₹1,617 apiece. Despite rising over two per cent in the past month, the shares have shed eight per cent year-to-date. Currently, the share price of the company is trading at ₹1,587.50, with a decline of 0.62%.

Disclaimer: This news is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here