Why Tata Teleservices Share Price is Rising

Tata group stocks are frequently in the news in 2024, mostly for all the right reasons.

There's no denying a cult following Tata group and the charismatic nature surrounding the stock prices of Tata companies.

Recently, we covered a lot of editorials on the Tata group and the stocks that should be on your radar.

Here are a few of them -

• Tata Elxsi - the worst performing Tata company announces best ever dividend for FY24.
• Tata Stock that outran Tata Elxsi.
• Wait for this Tata company's IPO before you buy semiconductor stocks.
• Radhakishan Damani sells this Tata stock. Should you too?

Adding to this list, Tata Teleservices share price has found investors' attention in recent trading sessions.

The stock price has shot up over 10% in the past 5 days with most of the gains coming in yesterday's trading session.

Let's find out why Tata Teleservices share price is rising.

Anticipation of Q4 Results

The current rally in Tata Teleservices shares can be attributed to anticipation building up ahead of the telecom company's Q4 earnings.

Tata Teleservices is all set to announce its Q4 earnings on 25 April 2024.

You see, investors tend to buy stocks in anticipation of earnings as they hope it's going to announce good numbers.

We're in the middle of yet another earnings season and this time around, the market is giving a strong cheer to companies that are posting decent margins and have good prospects in place for the next couple of quarters.

Stocks rallying 15% or even 20% owing to good earnings is nothing surprising these days... we recently saw this happen with yet another Tata stock - Tejas Networks.

In case of Tata Teleservices, it remains to be seen what the telecom major has to show this time as going by its history, the company has only posted consecutive losses for repetitive quarters.

Will it be different this time? We'll have to wait one more day to get the answer to this question.

But one thing remains certain - Tata Sons is expected to provide support to Tala Tele to reduce its elevated debt... this key factor should be kept in mind while analysing the company's growth prospects over the long term.

Last year, Tata Sons had announced to infuse an additional Rs 20.6 billion (bn) in the loss-making subsidiary Tata Teleservices.

Till date, Tata Sons has already repaid more than Rs 460 bn worth of debt.

Other Telecom Stocks Rise, Signalling Bullish Trend for Tata Teleservices

Apart from anticipation of results, the other reason why Tata Teleservices stock price gained traction is because most of the telecom stocks have seen an uptick in recent trading sessions.

Somehow, the sentiment has changed ever since cash-strapped Vodafone Idea successfully carried out its secondary share sale on hopes of a revival.

Performance of Top Telecom Stocks in Past 2 Days

Company	Current Price (Rs)	Change (%)
Vodafone Idea Ltd.	14.4	12%
Avantel Ltd.	122.6	10%
Tata Teleservices (Maharashtra) Ltd.	84.9	9%
Mahanagar Telephone Nigam Ltd.	38	5%
ITI Ltd.	293.4	5%
Kavveri Telecom Products Ltd.	13.6	5%
Shyam Telecom Ltd.	14.8	5%
Bharti Airtel Ltd.	1342.3	3%
Reliance Communications Ltd.	1.7	3%
Indus Towers Ltd.	359.7	3%

Source: Equitymaster

What Next?

Note that Tata Teleservices is partnering with multiple big firms to offer communication and allied services.

Last year, it introduced an operator connect integration for better communication on Microsoft Teams.

In November 2023, it had tied up with Truecaller to offer verified business caller ID solutions.

Coming to its financials, even though losses have come down in the past two years, the company faces intense competition.

Financial Snapshot

Rs m, standalone	FY19	FY20	FY21	FY22	FY23
Net Sales	12,772	10,777	10,437	10,938	11,062
Growth (%)	-32%	-16%	-3%	5%	1%
Operating Profit	7,326	4,562	5,130	4,846	5,093
OPM (%)	57%	42%	49%	44%	46%
Net Profit	-6,676	-37,141	-19,967	-12,150	-11,447
Net Margin (%)	-52%	-345%	-191%	-111%	-103%
ROE (%)	0.0	0.0	0.0	0.0	0.0
ROCE (%)	82.7	-457.8	-542.6	35.8	43.5
Dividend (Rs)	0.0	0.0	0.0	0.0	0.0
Debt to Equity (x)	-1.1	-1.0	-1.1	-1.1	-1.0

Data source: Ace Equity

Going forward, it is expected that Tata Group will derive some benefits from the 5G sector development in India since it is planning on entering the telecom equipment through Tata Teleservices.

Interestingly, foreign investors have taken sudden interest in this Tata group stock by taking their stake up in Tata Teleservices for the past 3 quarters.

How Tata Teleservices Share Price has Performed Recently

In the past 5 days, Tata Teleservices share price has gained 10%.

In 2024 so far, the stock is down 8%.

Tata Teleservices has a 52-week high of Rs 109 touched on 15 September 2023 and a 52-week low of Rs 60 touched on 27 April 2024.

In the past one year, share price of the company has shot up by 35%.

Here's a table comparing Tata Teleservices with its peers -

Comparative Analysis

Company	Tata Tele	Bharti Hexagon	Hathway Cable	MTNL	Railtel Corp
ROE (%)	0.0	14.0	1.4	0.0	11.9
ROCE (%)	43.5	12.9	1.9	-7.2	16.6
Latest EPS (Rs)	-6.1	10.9	0.5	-51.3	7.6
TTM PE (x)	0.0	84.5	46.5	0.0	50.9
TTM Price to book (x)	-0.8	5.5	0.9	-0.1	6.9
Dividend yield (%)	0.0	0.2	0.0	0.0	0.7
Industry PE	87.4
Industry PB	7.9

Data Source: Ace Equity, Equitymaster

About Tata Teleservices

Tata Teleservices is engaged in the business of Wired and wireless telecommunication activities and holds a Unified License with Access Service Authorisation in Maharashtra and Goa and also as in Internet Service Provider Category.

The company is focused on providing various wireline voice, data, and managed telecom services.

To know more, check out Tata Teleservices financial factsheet and its latest quarterly results.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...