Operating Margin - Tata Communications Ltd (NSE:TATACOMM)

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Price: 1 799.1 INR 1.07%

Market Cap: 512.7B INR

8.2%

Current

10%

Average

9.7%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

8.2%

Operating Profit

19.6B

Revenue

238.5B

Operating Margin Across Competitors

Country	Company	Market Cap	Operating Margin
IN	Tata Communications Ltd NSE:TATACOMM	512.7B INR	8%
US	AT&T Inc NYSE:T	174.7B USD	19%
US	Verizon Communications Inc NYSE:VZ	172.4B USD	24%
DE	Deutsche Telekom AG XETRA:DTE	131.3B EUR	23%
CN	China Telecom Corp Ltd SSE:601728	613.1B CNY	7%
JP	Nippon Telegraph and Telephone Corp TSE:9432	12.9T JPY	13%
SG	Singapore Telecommunications Ltd SGX:Z74	76.9B SGD	10%
SA	Saudi Telecom Company SJSC SAU:7010	189B SAR	18%
FR	Orange SA PAR:ORA	36.4B EUR	11%
AU	Telstra Corporation Ltd ASX:TLS	55.4B AUD	17%
CH	Swisscom AG SIX:SCMN	28.9B CHF	12%

Tata Communications Ltd
Glance View

Economic Moat

None

Market Cap

512.7B INR

Industry

Telecommunication

In the dynamic world of global telecommunications, Tata Communications Ltd. stands as a crucial player, weaving intricate networks that connect continents and foster seamless communication. Emerging from the robust legacy of the Tata Group, one of India's most respected conglomerates, Tata Communications began its journey with the acquisition of the international arm of Videsh Sanchar Nigam Limited in 2008. This strategic move positioned the company to emerge as a linchpin in global digital infrastructure, offering a diverse range of services from data transmission and network management to cloud enablement and cybersecurity solutions. The company leverages its extensive subsea fiber optic network, which is one of the largest in the world, to provide enterprises with the backbone they need for global connectivity, helping businesses expand their reach while maintaining high levels of efficiency and security. Operating in over 200 countries, Tata Communications earns its revenue through a multi-pronged approach. Primarily, the company derives income from providing enterprise clients with global Voice and Data Solutions. Its portfolio includes a robust suite of next-gen managed services and technology integration that cater to sectors like banking, media, and manufacturing. By concentrating on high-margin services like software-defined networking and cloud services, Tata Communications not only ensures a steady stream of revenue but also aligns itself with the rapid digitization needs of modern enterprises. Additionally, the company enhances its financial health through collaboration with various partners, developing infrastructure that supports the exponential growth of the internet of things (IoT) and 5G technologies. This positions Tata Communications not just as a service provider, but as a strategic partner in the digital transformation journey of businesses across the globe.

View TATACOMM Analysis

TATACOMM Intrinsic Value

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What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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Tata Communications Ltd
NSE:TATACOMM