Religare Capital has maintained 'Buy' on Tata Communications (TCOM) after the company declared its second quarter results. The stock broker fixed price target at Rs 575.

Commenting on the results, Religare said, ''TCOM's Q2FY16 revenue performance was a mixed bag with voice declining 9.3% and data growing 16.9% year-on-year (YoY). EBITDA margins expanded 80bps QoQ but were flat YoY. Improved voice margins and lower finance cost supported PAT growth to Rs 60mn. Management guided for a better H2 and indicated that momentum will be led by the enterprise data segment.''

Commenting on the investment rationale, the stock broker said, ''Overall, the quarter was a mixed bag for TCOM. We continue to like the company given its increasing shift towards the higher margin data business, deleveraging and improving ROCE. A pick up in data margins and the data centre stake sale will be key catalysts for the stock. Maintain Buy with an STOP-based Sep'16 TP of Rs 575. Valuations at 5.1x FY17E EV/EBITDA are reasonable.''  

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