Tata Communications Ltd is Rated Hold by MarketsMOJO

Rating Context and Current Position

On 04 August 2025, MarketsMOJO revised Tata Communications Ltd’s rating from Buy to Hold, reflecting a change in the company’s overall mojo score which dropped from 72 to 57. This adjustment signals a more cautious stance on the stock, advising investors to maintain their positions rather than actively accumulate shares at this stage. It is important to note that while the rating change occurred several months ago, the data and performance indicators presented here are current as of 20 January 2026, ensuring a relevant and timely assessment.

Quality Assessment

As of 20 January 2026, Tata Communications Ltd maintains a good quality grade. The company demonstrates high management efficiency, evidenced by a robust Return on Capital Employed (ROCE) of 18.37%. This metric indicates that the firm is generating solid returns on the capital invested in its operations, a positive sign for long-term sustainability. However, the company’s operating profit growth over the past five years has been modest, at an annualised rate of 6.65%, suggesting limited expansion in core profitability.

Valuation Perspective

The stock’s valuation remains attractive relative to its peers and historical averages. Trading at an enterprise value to capital employed ratio of 4, Tata Communications Ltd is priced at a discount compared to sector benchmarks. This valuation appeal is further supported by a Return on Capital Employed of 12.5% in recent assessments, which, while lower than the peak ROCE, still indicates reasonable capital efficiency. Investors should consider this valuation in the context of the company’s growth prospects and financial health.

Financial Trend Analysis

Despite some positive indicators, the financial trend for Tata Communications Ltd is currently negative. The company is classified as a high debt entity, with an average debt-to-equity ratio of 12.62 times, which raises concerns about leverage and financial risk. Recent quarterly results highlight challenges, including a 25.5% decline in Profit After Tax (PAT) to ₹197.29 crores and the lowest operating cash flow for the year at ₹2,910.81 crores. Additionally, the operating profit to interest coverage ratio has fallen to 5.81 times, signalling tighter margins for servicing debt. These factors contribute to the cautious rating and suggest that investors should monitor the company’s deleveraging efforts and profitability trends closely.

Technical Outlook

From a technical standpoint, the stock exhibits a mildly bullish trend. Price movements over recent periods show mixed performance: a one-day decline of 0.68%, a one-week gain of 0.85%, but a one-month and three-month decline of 4.00% and 8.05% respectively. Year-to-date, the stock has fallen by 3.98%, while over the past year it has delivered a modest 1.46% return. These fluctuations reflect market uncertainty and suggest that while there is some upward momentum, it is not yet strong enough to warrant a more optimistic rating.

Investor Considerations

For investors, the Hold rating implies a recommendation to maintain existing positions without initiating new purchases or sales. The company’s attractive valuation and good quality metrics offer some reassurance, but the negative financial trends and high leverage warrant caution. Institutional investors hold a significant stake of 32.64%, having increased their holdings by 0.65% in the previous quarter, indicating confidence from more sophisticated market participants. However, retail investors should weigh the risks associated with the company’s debt levels and recent earnings volatility.

Summary of Key Metrics as of 20 January 2026

• Mojo Score: 57.0 (Hold grade)


• ROCE: 18.37%


• Debt to Equity Ratio (average): 12.62 times


• Operating Profit Growth (5-year CAGR): 6.65%


• Operating Cash Flow (Yearly): ₹2,910.81 crores (lowest recent)


• Profit After Tax (Quarterly): ₹197.29 crores, down 25.5%


• Operating Profit to Interest Coverage (Quarterly): 5.81 times


• Stock Returns: 1D -0.68%, 1W +0.85%, 1M -4.00%, 3M -8.05%, 6M -0.71%, YTD -3.98%, 1Y +1.46%


• Institutional Holdings: 32.64%, increased by 0.65% last quarter

What the Hold Rating Means for Investors

The Hold rating from MarketsMOJO suggests that Tata Communications Ltd currently offers neither a compelling buy opportunity nor a strong sell signal. Investors are advised to retain their existing holdings while monitoring the company’s financial health and market developments. The rating reflects a balance between the company’s solid management efficiency and attractive valuation against the backdrop of financial headwinds and moderate technical momentum.

Investors should pay close attention to the company’s efforts to manage its high debt levels and improve profitability in upcoming quarters. The modest growth in operating profit and recent negative quarterly results highlight the need for cautious optimism. Meanwhile, the stock’s valuation discount and institutional interest provide some support for the share price, making it a candidate for watchful holding rather than active trading.

Sector and Market Context

Operating within the Telecom - Services sector, Tata Communications Ltd faces competitive pressures and capital-intensive business dynamics. The midcap company’s performance should be viewed in relation to sector peers and broader market trends. While the telecom sector often offers stable cash flows, the company’s high leverage and subdued growth rate may limit upside potential in the near term. Investors seeking exposure to this sector might consider Tata Communications Ltd as a steady, though not aggressively growing, option.

Overall, the current Hold rating encapsulates a prudent approach, balancing the company’s strengths and weaknesses as of 20 January 2026.

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