Shares of telecommunication services provider Tata Teleservices (Maharashtra) has rallied 36% in the last five trading days even after falling more than 10% in the last two sessions. The Tata Group stock has gained momentum as investors are betting high on the telecom company amid optimism that it would derive some benefit from the 5G rollout by the telecom operators. The Tata group is looking to enter the telecom equipment, network, and technology market and has collaborated with Japanese chipmaker Renesas Electronics Corp to develop wireless network solutions including 5G. While Tata Consultancy Services has signed a pact with Bharti Airtel for implementing 5G network solutions for India.
The multibagger stock, which delivered a massive return of 4,600% in the last three years, had lost some steam in the calendar year 2022, with the share price falling 40% on a year-to-date (YTD) basis. Despite this slump, the large-cap stock has leapt more than 250% in the last year. The stock has grown more than three times from its 52-week low of ₹33.3 touched on August 7, 2021, while it traded 58% lower than its 52-week high of ₹291.05 on January 11, 2022.
On Tuesday, Tata Teleservices (TTML) shares opened lower for the second straight day and declined as much as 8.75% to hit an intraday low of ₹121 on the BSE. During the session, the counter rose 2.19% to touch a high of ₹135.5, before settling at ₹122.95, down 7.28% as compared to the previous closing price of ₹132.60. The stock witnessed choppy trade today with an intraday volatility of 8.05%. In contrast, the BSE benchmark Sensex closed 49 points lower at 59,197 levels in muted trade, in absence of any major trigger on the domestic or global front.
TTML shares currently trade in the ‘mildly bearish’ range, higher than its 5-day, 20-day, and 50-day moving averages, but lower than 100-day and 200-day averages.
Tata Teleservices shares have witnessed a phenomenal rally in the last few years even as the company continued to report losses for the past several years. The Mumbai-based broadband, telecommunications, and cloud service provider reported a net loss of ₹295.3 crore during the quarter ended June 2022 (Q1 FY23), as compared to a loss of ₹318.6 crore in the year-ago period and a loss of ₹280.6 crore in March quarter of 2022. The total income stood at ₹269 crore as against ₹270 crore in the corresponding period last year.
The debt-laden Tata group company has been continuously receiving financial and managerial support from its parent, Tata Sons, which has infused about ₹46,595 crore between January 01, 2014, and June 30, 2019, into the business to fund the losses, debt repayments as well as capital expenditure.
Despite strong returns, analysts have cautioned investors to be more vigilant while investing in such risky stocks. Weak capital structure, low debt coverage indicators, along with high losses incurred in the past remain key concerns for the company.