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Tata Communications Limited (NSE:TATACOMM) Just Released Its Third-Quarter Results And Analysts Are Updating Their Estimates
Last week, you might have seen that Tata Communications Limited (NSE:TATACOMM) released its quarterly result to the market. The early response was not positive, with shares down 4.0% to ₹1,629 in the past week. The result was positive overall - although revenues of ₹58b were in line with what the analysts predicted, Tata Communications surprised by delivering a statutory profit of ₹8.28 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Tata Communications
After the latest results, the seven analysts covering Tata Communications are now predicting revenues of ₹253.1b in 2026. If met, this would reflect a meaningful 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 74% to ₹64.78. In the lead-up to this report, the analysts had been modelling revenues of ₹259.8b and earnings per share (EPS) of ₹70.89 in 2026. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the ₹1,863 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Tata Communications, with the most bullish analyst valuing it at ₹2,070 and the most bearish at ₹1,600 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Tata Communications' rate of growth is expected to accelerate meaningfully, with the forecast 8.1% annualised revenue growth to the end of 2026 noticeably faster than its historical growth of 5.9% p.a. 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 most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded Tata Communications' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Tata Communications (1 shouldn't be ignored) you should be aware of.
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 second-rate dividend payer.