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Friday, July 9, 2021

Rs 4 to Rs 47: This stock turned into a multibagger in one year

An amount of Rs 1 lakh invested in the mid cap stock a year ago would have turned into Rs 12.29 lakh today


Tata Teleservices share has gained 489% since the beginning of this year and climbed 113% in one month.


Share of  Tata Teleservices (Maharashtra) Ltd has delivered 1,129% returns to its shareholders in one year. The stock, which closed at Rs 3.82 on June 9, 2020 rose to Rs 46.95 on BSE today. An amount of Rs 1 lakh invested in  Tata Teleservices stock a year ago would have turned into Rs 12.29 lakh today.

In comparison, Sensex has risen merely 42.58% during the period. The stock has outperformed Sensex by 1,086% during the period.

 Tata Teleservices share has gained 489% since the beginning of this year and climbed 113% in one month.

However, the stock was stuck in lower circuit of 5% on BSE today. At 12:33 pm, the share was trading 5% lower at Rs 46.95 against previous close of Rs 49.40 on BSE.

The stock opened with a loss of 4.96% today. The mid cap share has fallen 14% in the last three days.

Tata Teleservices share is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. Market cap of the Tata Group firm fell to Rs 9,178 crore on BSE.

Promoters held 74.36% stake in the firm and public shareholders owned 25.64% at the end of March quarter. The stock was held by two FIIs (0.01% stake) at the end of March quarter. In December quarter, FIIs did not hold any stake in the firm.

The share of the Mumbai-based firm has outperformed its peers in the last one year. Bharti Airtel share has fallen 6.56%  during the period.

Share of another competitor Vodafone Idea has lost 5.23% in one year.  MTNL stock has gained 90.1% in one year.

Share of Reliance Communications share has climbed 42.41% in one year.

The strong rally in Tata Teleservices stock can be attributed to improvement in financial performance of the firm.

The firm reported a loss of Rs 288.29 crore in March quarter against loss of Rs 873.96 crore in the corresponding quarter of preceding fiscal. In the June quarter of last fiscal, its loss widened to Rs 1,069 crore.

Since then, the firm has logged narrowing of losses on a quarterly basis. On an annual basis too, the firm's net loss reduced to Rs 1,996.69  crore for the fiscal ended March 2021 against Rs 3,714 crore loss for the fiscal ended March 2020.  As of fiscal year 2021, the firm had total debt of  Rs 17,774.47 crore.

However, the firm has posted losses since 2009 except for two quarters. The company has reported losses in 47 out of 49 quarters. For quarters ended March 2019 and June 2016, the firm reported profit.

Recent steps by Tata Sons for Tata Teleservices may have contributed to the rally in the stock.

According to reports, Tata Teleservices is being revived in a new avatar called Tata Tele Business Services (TTBS), which will cater to small and medium enterprises.

TTBS has launched Smartflo, a cloud-hosted communication platform. The platform is meant for SMEs that have a hybrid work culture where people work from home and remote locations. Smartflo can be accessed through mobile phones and desktops.

A recent report from Care Rating has reaffirmed its rating on the firm's long-term and short-term bank facility and instruments. The rating agency said the continuous support from its promoter Tata Sons indicates that it will take all necessary actions to organiSe any shortfall in liquidity for the ensuing 12 months. CARE also noted the improvement in operating performance of the entity in FY21 post demerger of consumer mobile business.

Till June 2019, Tata Sons had infused about Rs 46,595.05 crore in Tata Teleservices (Maharashtra) Ltd and its associate Tata Teleservices Limited (TTSL). The entities continue to be integral to Tata Group as demonstrated by consistent support from Tata Sons. The financial flexibility enjoyed by TTML continues to be highly favourable despite no further fresh infusion of funds post-June 2019, the rating firm said.

Last year, Tata Sons had written off its investment of  Rs 28,600 crore in Tata Tele. Its consumer mobile operations were transferred to Bharti Airtel in July 2019.

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