Tata Communications Limited Just Missed EPS By 29%: Here's What Analysts Think Will Happen Next

Tata Communications Limited (NSE:TATACOMM) shareholders are probably feeling a little disappointed, since its shares fell 4.6% to ₹1,873 in the week after its latest quarterly results. Statutory earnings per share fell badly short of expectations, coming in at ₹7.97, some 29% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at ₹58b. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Tata Communications after the latest results.

View our latest analysis for Tata Communications

Taking into account the latest results, the current consensus from Tata Communications' eight analysts is for revenues of ₹236.3b in 2025. This would reflect a satisfactory 4.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 43% to ₹46.59. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹237.0b and earnings per share (EPS) of ₹55.55 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

The consensus price target held steady at ₹1,972, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Tata Communications, with the most bullish analyst valuing it at ₹2,220 and the most bearish at ₹1,645 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Tata Communications' growth to accelerate, with the forecast 8.1% annualised growth to the end of 2025 ranking favourably alongside historical growth of 4.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Tata Communications to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tata Communications. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at ₹1,972, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Tata Communications. Long-term earnings power is much more important than next year's profits. We have forecasts for Tata Communications going out to 2027, and you can see them free on our platform here.

Even so, be aware that Tata Communications is showing 3 warning signs in our investment analysis , you should know about...

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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.