Tata Communications: data centre plumbing at 45.9x earnings

Tata Communications Limited (NSE: TATACOMM) grew Q1 FY27 consolidated revenue 10.5% to ₹6,583 crore. Net profit fell to ₹130 crore from ₹190 crore. The stock is at ₹1,682, down from its high of ₹2,100. What happened Data Services, at 86% of revenue, delivered an EBITDA margin of 18.7%. The digital portfolio is about 50% of data service revenue. EBITDA grew 8.2% to ₹1,230 crore. Net profit fell due to a data centre fire, contractual provisions and one-time charges. Net debt stands at ₹10,400 crore, a ratio of 2.1 times EBITDA. Management guides double-digit EBITDA growth for FY27. Why it matters Over 35% of global internet traffic routes through Tata's 500,000 km subsea fibre network. It connects to 102 carrier-neutral data centres in India and 650 global PoPs. It is not a data centre operator. It is the connectivity layer between them. India's data centre capacity reached 1.75 GW by H1 2026, with $173 billion committed. Every new facility needs connectivity. My view One-time charges distort the profit. Strip them out and the operating business is growing. EBITDA grew 8.2% while revenue grew 10.5%. The network moat is real. 500,000 km of subsea fibre cannot be replicated. Tata holds a 26% stake in STT GDC and is investing in 800G wavelength technology for AI data traffic. Valuation at 45.9 times earnings is above its five-year median of 35.4 times. Debt at 2.1 times EBITDA and the profit fall remain constraints. What I am watching Q2 FY27 results, EBITDA margin above 19%, and net debt falling. On the chart, ₹1,400 is the 52-week low and ₹2,100 is the high. My stance: Accumulate near ₹1,600. The connectivity story is real and durable. Disclosure: I do not hold a position in Tata Communications Limited at the time of writing. This is not investment advice.