Tata Teleservices up 3,000% in a year, analysts advise caution

The stock has moved from ₹2.25 two years ago to ₹290.15 on Tuesday.

The stock has been locked in a 5% upper circuit for the past 13 consecutive trading sessions to hit a market capitalization of ₹56,898 crore, more than Tata Communications, Voltas, Trent, Tata Elxsi, Tata Chemicals, or Indian Hotels.

“It’s bizarre a company that reported net losses for several years and not even generating revenue to pay interest is trading more than 50 times the sales,” said Ambareesh Baliga, an independent analyst.

“The stock has been on the upper circuit for several days with many rumours floating around in social media, and surprisingly the management is keeping quiet.”

TTML, formerly known as Hughes Telecom, is a subsidiary of Tata Teleservices and was once engaged in telecommunication service and licensed to provide services in Maharashtra and Goa. Tata Tele owns a 48.30% stake in TTML while Tata Sons and Tata Power hold 19.58% and 6.48% stake in the company.

Struggling with considerable debt, the company started languishing since 2008. NTT DoCoMo, Japan’s biggest telco, sold its entire 26.5% stake in Tata Teleservices in 2018. Later in 2019, Tata Tele sold its consumer mobile businesses, including assets, spectrum, and liabilities, to Airtel.

TTMLs fundamentals continue to show the dismal trend of falling revenues and continuing losses. The company reported Rs 2,000 crore losses in FY21 and nearly Rs 21,300 crore in the last 10 years. Since FY2019, the company has been paying interest on debt more than its turnover.

Though the company has narrowed its losses in the past year, its debt has increased to 19,700 crore as of September 2021 compared to 17,774 as of March 31, 2021.

TTML provides connectivity and communication solutions. With services ranging from connectivity, collaboration, cloud, security, IoT, and marketing solutions, it offers a comprehensive portfolio of ICT services for businesses in India under the brand name Tata Tele Business Services (TTBS).