Operating profit grows, but tax and other income cut net profit 75%
Consolidated margin improved YoY but slipped 0.25 percentage points QoQ as costs grew faster than revenue; shares rose +3.65% after the filing.
Filed 22 Apr 2026, 16:03 IST · after market close · Tata Communications Ltd (TATACOMM)
Key takeaways
- Consolidated operating profit rose +14.42% YoY as revenue grew +9.41% while expenses grew +8.26%, lifting operating margin by 0.86 percentage points.
- Net profit fell -75.08% YoY as other income declined and the tax rate rose 22.64 percentage points to 41.41%.
- The stock gained +3.65% on the first trading day after results, above its 2.35% median absolute move across the past eight result reactions.
Price around the results
Revenue growth outpaced the prior year
Consolidated revenue grew +9.41% YoY to Rs 6,554.15 cr, while operating profit rose faster at +14.42%. Sequentially, revenue increased +5.90%, but the pace was slightly below expense growth of +6.24%, limiting operating leverage in Q4FY26.
Margin improved YoY but slipped from Q3
Operating margin expanded by 0.86 percentage points YoY because expenses grew more slowly than revenue, but narrowed 0.25 percentage points QoQ as costs grew faster. The margin path moved from 19.07% in Q1FY26 to 19.24%, 19.84% and 19.59%, so Q4 marked a pullback after two consecutive quarterly increases. Tata Communications matched the 19.59% median operating margin among seven telecom peers that had reported.
Lower other income and higher tax weakened profit quality
Profit before tax fell -52.77% YoY even as operating profit improved, largely because other income dropped -89.36% to Rs 71.29 cr from Rs 669.91 cr. Other income still represented 16.11% of pre-tax profit, while the tax rate rose from 18.77% to 41.41%, leaving net profit down -75.08% YoY. The sequential tax-rate increase of 19.74 percentage points also pushed net profit down -28.82% despite operating profit rising +4.55%.
The initial share reaction was larger than Tata Communications' norm
The results were filed after market close, and the stock gained +3.65% on 23 April, with trading volume at 9.0 times the reference level. The move was above the 2.35% median absolute reaction across the past eight result events, although the stock has risen after three and fallen after five of those results.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹6,554 cr | ₹6,189 cr | +5.90% | +9.41% |
| Other income | ₹71 cr | ₹190 cr | -62.40% | -89.36% |
| Expenses | ₹5,270 cr | ₹4,961 cr | +6.24% | +8.26% |
| Operating profit | ₹1,284 cr | ₹1,228 cr | +4.55% | +14.42% |
| Operating margin (%) | 19.59% | 19.84% | — | — |
| Interest | ₹182 cr | ₹201 cr | -9.80% | -0.41% |
| Depreciation | ₹731 cr | ₹751 cr | -2.70% | +8.70% |
| Profit before tax | ₹443 cr | ₹465 cr | -4.83% | -52.77% |
| Tax | ₹183 cr | ₹101 cr | +81.83% | +4.20% |
| Net profit | ₹259 cr | ₹364 cr | -28.82% | -75.08% |
| EPS (₹) | ₹9.24 | ₹12.82 | -27.93% | -74.68% |
Operating margin of 19.59% compares with a Telecommunication sector median of 19.59% across 7 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +3.65% | +4.49% |
| Next session | -0.29% | — |
| 5 sessions | +3.64% | +5.20% |
| 15 sessions | +10.16% | — |
| 30 sessions | +24.97% | — |
Volume on the results session was 9.00× its 20-day average.
What to watch
- Whether operating margin holds above 19.59% after the 0.25 percentage-point QoQ decline.
- Whether the tax rate moves below 41.41% in the next quarter.
- Whether other income's contribution remains near 16.11% of pre-tax profit.