Shares of Tata Communications Ltd have more than doubled investors’ wealth, delivering 105% returns in three years. Tata Communications shares hit a record high of Rs 1858 against the previous close of Rs 1820 on BSE. Total 0.50 lakh shares of the firm changed hands amounting to a turnover of Rs 9.22 crore on BSE. Market cap of the Tata Group firm climbed to Rs 52,145 crore. The stock fell to a 52-week low of Rs 1095.05 on September 26, 2022.
The multibagger Tata Group stock hit a record high on Thursday after the firm said it plans to raise Rs 1,750 crore by issuing 1,75,000 non-convertible debentures (NCDs) of face value of Rs 1,00,000 each.
The company also unveiled a global cloud-based 5G Roaming Laboratory that empowers Mobile Network Operators (MONs). It provides a platform to conduct Proof of Concepts (POCs) before rolling out 5G services to their customers. This also turned sentiment positive around the stock.
The large cap stock has gained 56.53% in one year and risen 38.83% since the beginning of this year.
In terms of technicals, the relative strength index (RSI) of the Tata Communications stock stands at 72.7, signaling it's trading in the overbought zone. Tata Communications shares have a beta of 1.1, indicating average volatility in a year. Tata Communications shares are trading higher than the 5 day, 10 day, 20 day, 50 day and 200 day moving averages.
The Tata Group firm reported a decline of 29.8 per cent in net profit to Rs 381.7 crore in the June 2023 quarter compared to Rs 544.8 crore in the corresponding period last year. Revenue from operations climbed 10.7 per cent to Rs 4,771.4 crore in the first quarter of current fiscal, compared to Rs 4,310.5 crore in the year-ago period. The data business revenue stood at Rs 3,912 crore, logged a growth of 17.1 per cent over the corresponding period last year.
The firm reported a strong set of earnings on an annual basis in the last three years, which lifted sentiment around the stock.
It reported a profit of Rs 1796 crore in the March 2023 fiscal against Rs 1481.8 crore in the March 2022 fiscal. In the fiscal ended March 2021, net profit came at Rs 1250.6 crore against a loss of Rs 86 crore in the March 2020 fiscal.
The company clocked a good profit growth of 20.3% CAGR over the last five years.
Despite the stock trading in overbought zone, analysts expect it to rally further. Here’s what they said.
Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "The stock has made a series of higher bottom formation pattern on the daily chart in the last 2-3 months and recently once again taking support near Rs 1675 zone has witnessed another decent rise to indicate a breakout above Rs 1815 zone making new high with bias maintained strong and is anticipated for next near-term target of Rs 1955-1970 levels from here on. The longer term targets would be Rs 2350 and Rs 2570 levels in the next 6-8 months time frame."
Aditya Gaggar, Director of Progressive Shares said, "In June 2023, Tata Communications has given a breakout from an Inverted Head and Shoulder formation. Post the breakout, the stock was seen moving in a higher top higher bottom formation with considerable volumes. Momentum Indicators and trend-following indicators support price activity. As per the pattern, the target is Rs 1,950. We have a report initiated (on 12th June) on the stock at Rs 1470 with the target price of Rs 1710 (achieved) and Rs 1950."
Abhijeet from Tips2trades said, "Tata Communications stock price is bullish but also overbought on the daily charts with next resistances at Rs 1850 & Rs 1895. Investors should book profits at current levels or hold till daily support of Rs 1726 is broken on a closing basis."
Gaurav Bissa, VP, InCred Equities said, "Tata Communications has been one of the strongest outperformers among the F&O space. The stock was seen gaining momentum after breaking out from a bullish symmetrical triangle. This was followed by a smaller bullish penant which pushed the stock towards Rs 1800 levels. The stock is expected to witness a further upside till Rs 1900-1950 levels in the coming days and any dip towards Rs 1600-1650 can be used as a buying opportunity."
Tata Communications is engaged in the business of providing international telecommunications services. The company’s segments include Voice Solutions (VS), Data and Managed Services (DMS) and Real Estate (RE). The VS segment includes international and national long distance voice services. The DMS segment includes corporate data transmission services, virtual private network signaling and roaming services, television, and other network and managed services. The RE segment includes lease rentals for premises given on lease and does not include premises held for capital appreciation.
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