Standalone profit drops 40.33% despite operating profit growth
Operating margin improved 0.39 percentage points YoY but declined for a second straight quarter as costs outpaced revenue sequentially.
Filed 15 Oct 2026, 13:59 IST · Tata Communications Ltd (TATACOMM)
Key takeaways
- Standalone net profit declined -40.33% YoY to Rs 125.86 cr despite operating profit rising +4.46%.
- Other income fell -51.92% YoY and accounted for 40.56% of standalone pre-tax profit, highlighting weak profit quality.
- Standalone operating margin slipped 0.39 percentage points QoQ to 25.39% as expenses grew +1.38%, faster than revenue at +0.84%.
Price around the results
Operating gains did not translate into profit
Standalone revenue rose +2.86% YoY while expenses grew +2.32%, allowing operating profit to increase +4.46%. Pre-tax profit nevertheless declined -29.51%, as other income fell -51.92%, interest expense rose +5.08% and depreciation increased +4.65%. The tax rate also rose 13.54 percentage points YoY to 25.35%, adding to the pressure on net profit.
Sequential margin slipped as costs grew faster
Revenue increased +0.84% QoQ, but expenses grew +1.38%, reducing operating profit by -0.71% and narrowing operating margin by 0.39 percentage points. Other income rose +147.22% sequentially, helping pre-tax profit increase +21.36% and net profit rise +20.50%. The margin has now declined for two consecutive quarters, from 26.03% in Q4FY26 to 25.78% in Q1FY27 and 25.39% in Q2FY27, although it remains 0.39 percentage points above the year-ago level.
Management flags profitability and operating priorities
In its investor presentation, management said it plans to drive absolute EBITDA growth, NPS and ESAT. The presentation also said the company plans to accelerate profitability. These statements set the company's stated priorities against the quarter's sequential margin decline.
No current move; past reactions lack direction
The results are too fresh for a post-results stock move to assess. Across the last eight results reactions, the stock rose four times and fell four times, with a median absolute move of 3.16%, offering no consistent directional pattern.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,854 cr | ₹1,839 cr | +0.84% | +2.86% |
| Other income | ₹68 cr | ₹28 cr | +147.22% | -51.92% |
| Expenses | ₹1,383 cr | ₹1,365 cr | +1.38% | +2.32% |
| Operating profit | ₹471 cr | ₹474 cr | -0.71% | +4.46% |
| Operating margin (%) | 25.39% | 25.78% | — | — |
| Interest | ₹94 cr | ₹92 cr | +2.52% | +5.08% |
| Depreciation | ₹276 cr | ₹271 cr | +1.99% | +4.65% |
| Profit before tax | ₹169 cr | ₹139 cr | +21.36% | -29.51% |
| Tax | ₹43 cr | ₹34 cr | +23.96% | +51.35% |
| Net profit | ₹126 cr | ₹104 cr | +20.50% | -40.33% |
| EPS (₹) | ₹4.42 | ₹3.66 | +20.77% | -40.27% |
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company plans to drive absolute EBITDA growth, NPS and ESAT.
- The company plans to accelerate profitability.
What to watch
- Whether operating margin stabilises after falling from 26.03% in Q4FY26 to 25.39% in Q2FY27.
- Whether other income remains a large contributor at 40.56% of pre-tax profit.
- Whether the tax rate moves below 25.35% after rising 13.54 percentage points YoY.