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Is There Now An Opportunity In Tata Communications Limited (NSE:TATACOMM)?
Tata Communications Limited (NSE:TATACOMM), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the NSEI. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stockâs share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Tata Communicationsâs outlook and valuation to see if the opportunity still exists.
See our latest analysis for Tata Communications
Is Tata Communications Still Cheap?
According to my valuation model, Tata Communications seems to be fairly priced at around 14% below my intrinsic value, which means if you buy Tata Communications today, youâd be paying a fair price for it. And if you believe the companyâs true value is âš1418.40, then there isnât much room for the share price grow beyond what itâs currently trading. So, is there another chance to buy low in the future? Given that Tata Communicationsâs share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Tata Communications?
Future outlook is an important aspect when youâre looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that itâs the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Tata Communications' earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? TATACOMMâs optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we havenât considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If youâve been keeping tabs on TATACOMM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means itâs worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Tata Communications.
If you are no longer interested in Tata Communications, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Valuation is complex, but we're here to simplify it.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NSEI:TATACOMM
Reasonable growth potential average dividend payer.