Shares of Tata Communications Ltd. are bucking the trend in an otherwise weak market, trading 9% higher to hit a day’s high of ₹1,481.50. The stock received a double upgrade from brokerage firm ICICI Securities on Tuesday, March 11.

ICICI Securities has double upgraded Tata Communications to ‘Buy’ from its earlier rating of ‘Hold’. Alongside this upgrade, the brokerage has also raised its price target to ₹1,840 from ₹1,690 earlier. The revised price target implies a potential upside of 34% from Monday’s closing levels.

According to ICICI Securities, the recent decline in Tata Communications stock has made valuations compelling, and risk-reward favorable.

TCom’s performance over the past 12 months was affected by various challenges, particularly a muted order book. However, order flow has started gaining traction.

The company also remains confident of more conversion from its strong sales funnel, which has piled up over the past few years.

In FY24, the company faced setbacks due to a cable cut in the Red Sea and weak order book growth. With the Red Sea issue now behind and double-digit growth in the FY25 year-to-date order book, the brokerage expects TCom’s data revenue growth to swell.

TCom’s digital services revenue growth is also expected to pick up from the fourth quarter onwards, driven by large deal executions, and sustain momentum into FY26.

ICICI Securities believes that aside from TCom’s strong digital product portfolio, the market has yet to fully factor in the company’s ₹3,300 crore estimated free cash flow (FCF) generation in FY27 (EBITDA minus capex) in core connectivity, which represents 7.2% of enterprise value (EV).

Additionally, TCom expects higher digital revenue and operating leverage to drive EBITDA breakeven in digital services. “We estimate digital services will reach EBITDA breakeven in FY27E, compared to an ₹800 crore EBITDA loss projected for FY25E, resulting in a significant drop in cash burn,” ICICI Securities said.

Notably, TCom has launched multiple cloud-focused products, which are expected to benefit from rising adoption in the cloud ecosystem.

Moreover, the company has been proactive in embedding AI into its internal processes and services. These strategic investments—along with their long-term potential—remain undervalued, the brokerage added.

Shares of Tata Communications are currently trading 7.68% higher at ₹1,478.70. Despite the gain, the stock has fallen 15% so far in 2025.