Tata Communications stock price hit the upper circuit of 5% today after the company posted a seven-fold rise in its profit for Q2.
Tata Communications posted an around seven-fold jump in consolidated net profit at Rs 384.81 crore for the September quarter, as compared to a profit of Rs 54.31 crore in the corresponding period of the last fiscal.
Company's consolidated revenue registered a 4.5% YoY growth to Rs 4,477.18 crore during the July- September quarter as against Rs 4,282.3 crore in the year-ago period. On a sequential basis, the revenue was flat.
With only bids and no offers, the stock price of Tata Communications opened with a gain of 5% today at Rs 921.45, also it's intraday high against the last close of Rs 877.60 on BSE. The stock also touched an intraday low of Rs 918.20.
Tata Communications stock has traded in a narrow range of Rs 3.25 and is 1.69% away from 52-week high of Rs 937 today.
Tata Communications share price has gained 75% in one week and 132% since the beginning of the year. Tata Communications is trading higher than 5, 20, 50, 100 and 200-day moving averages.
The company during the quarter received a demand note from the Department of Telecommunications (DoT) to pay Rs 6,633.43 crore towards licence fees on its adjusted gross revenue (AGR) for the financial years 2006-07 till 2017-18, it said.
The company also concluded the sale of a land parcel along with building for a total consideration of Rs 67.41 crore.
"The demands received by the company included an amount of Rs 543370 lakhs which were disallowed by the DoT towards the cost adjusted to gross revenue by the company that were claimed on 'accrual basis' instead of payments basis, for which revised statements on the basis of actual payment has been submitted to the DoT," Tata Communications added.
Tata Communications said it has made a provision of Rs 337.17 crore during the January-March quarter.
Keshav Lahoti - Associate Equity Analyst, Angel Broking said," Net profit rose by 608% YoY to Rs.384.8 cr as EBIDTA margins improved significantly due to reduction in other expenses and network and transmission expenses and also due to increase in other income. Other income rose due to gain of Rs. 67.4 cr resulting from the sale of land parcel."
He added, "From a long term point of view, increasing usage of data and work from home culture is positive for the business of the Company. Reporting such strong performance will lead to re-rating for the Company. Overall, the Company reported better numbers than street expectations."