ICICI Securities has recently upgraded Tata Communications to a BUY rating, setting a target price of Rs 2,000—a potential upside of 24% from current levels. This recommendation follows a correction in the stock price and is anchored in the company’s strategic pivot towards digital services and operational advancements. With robust management commentary, accelerating profitability prospects, and a resilient growth outlook, Tata Communications stands at a critical juncture for investors seeking exposure in India’s evolving telecom and digital infrastructure sector.

Tata Communications: ICICI Securities Upgrades to BUY

ICICI Securities has elevated Tata Communications from ADD to BUY, with a target price of Rs 2,000 per share—an anticipated 24% upside. The stock’s recent correction presented an attractive entry point for long-term investors. This reflects the brokerage’s confidence in Tata Communications' digital business momentum, product innovation, and profitability improvements.

Strong Progress on Digital Services: A Paradigm Shift

Tata Communications' digital services are reshaping its growth story, with the business demonstrating resilient KPIs and robust orderbook expansion. Over the past three years, the company has seen markedly higher product penetration per customer, suggesting a successful transition from being a connectivity provider to a digital solutions architect. The 'million-dollar club' of large customers continues to expand, reinforcing customer mining efforts and loyalty. The Net Promoter Score stands at an impressive 84—twice that of its nearest competitor globally—confirming its leadership across geographies and service verticals.

Kaleyra Acquisition: Profitability On The Horizon

The Kaleyra acquisition, pivotal for Tata Communications’ CPaaS and CRM ambitions, has started showing operational improvements as unfavorable contracts are renegotiated. By enhancing SMS buying efficiencies and expanding into non-SMS channels, management expects improved contribution margins. The shift toward omnichannel offerings, including voice, WhatsApp, and programmable voice services, is set to lift Kaleyra’s profitability well above industry averages.

Financial Performance: Resilience and Upside Potential

Despite transient headwinds, Tata Communications retains a healthy financial outlook, with guidance reaffirmed for FY28. The company projects data revenue to reach Rs 280 billion by FY28, up from Rs 195 billion in FY25. Digital services will account for 60% of the mix, up from 47%. EBITDA margins are expected to accelerate to the 23–25% range by FY28, compared to ~20% in FY25.

Key Financial Metrics and Stock Levels

Below is a snapshot of Tata Communications’ key financial levels and projections:

Digital Business Orderbook: Momentum Accelerating

The digital services orderbook is expanding at a vigorous double-digit rate, buoyed by cross-selling success with new large-scale customers. Deals worth USD 50 million for security services were secured from clients with no prior core connectivity engagement. This exemplifies Tata Communications’ pivot from a legacy telecom provider to an enterprise technology innovator.

Connectivity Segment: Challenges Largely Addressed

Past connectivity revenue growth was stymied by cable cuts and regional headwinds, but recent fixes and market share recovery efforts are underway. The company is particularly optimistic about demand increases from AI data center connectivity and rising fiber capacity needs across India.

Strategic Investments and AI Readiness

Management has strategically invested USD 50–60 million annually in new product development, including the deployment of Nvidia H100 GPUs to lead market innovations, particularly in AI. Tata Communications was the first Indian corporate with an established Nvidia partnership, positioning it well as the Indian government subsidizes GPU access for broader AI adoption.

Non-Core Monetisation and AGR Risk

Tata Communications aims to unlock value by monetising its extensive land bank and remains committed to a 26% stake in STT-India data center ventures. An AGR contingent liability of Rs 100 billion is under legal consideration, with ample non-core asset reserves available if needed.

Peer Comparison: Tata Communications vs Sector Leaders

Relative to peers like Bharti Airtel, Reliance Jio, and Vodafone Idea, Tata Communications offers a differentiated digital infrastructure play with improving margins and disciplined capital allocation. The following table positions Tata Communications among its key competitors:

Conclusion and Investment Levels

ICICI Securities’ BUY call, backed by a Rs 2,000 target price and attractive valuation multiples, signals a clear opportunity for investors in a sector undergoing rapid transformation. Tata Communications combines digital sector ambition, operational progress, and prudent capital management—making this an appealing investment for those focused on India’s digital future.

Key Levels for Investors

Buy Zone: Rs 1,600–1,700

Target: Rs 2,000 (potential 24% upside)

Support: Rs 1,295

Resistance: Rs 2,175

All said, Tata Communications stands as a unique play on India’s digital infrastructure, with ICICI Securities’ endorsement setting the stage for investors to rethink their telecom allocations.