This Jhunjhunwala stock recovers 5% from 52-week low, gains after four days

Shares of Tata Communications logged a smart recovery today, rising over 5 per cent from its 52-week low in the previous session. Tata Communications stock hit a 52-week low of Rs 856, losing 7.12 per cent intraday on June 15 against the previous close of Rs 921.65 on BSE.

It hit an intraday high of Rs 904, rising 3.25 per cent today. The stock has risen 5.60 per cent or Rs 48 from its 52-week low in the current session. It has gained after four sessions of losses.

Shares of Tata Communications are trading lower than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages.

In one year, the stock has fallen 32 per cent and lost 39.56 per cent this year. It touched a 52-week high of Rs 1,590 on January 17, 2022.  

The stock forms part of ace investor Rakesh Jhunjhunwala's portfolio. Jhunjhunwala invested in the company through his wife Rekha Jhunjhunwala. As per the shareholding pattern of Tata Communications for the quarter ended March 2022, Rekha Jhunjhunwala owned 30,75,687 shares or a 1.08 per cent stake in the company.

The firm held its investor meet on June 14. However, the stock plummeted to 52-week low in the next session amid negative investor sentiment in the broader market.

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Here's a look at what brokerages and analysts said about the outlook for the stock post the investor meeting.

"The management guided at double-digit growth at its analyst meet to highlight its new-age capabilities and growth opportunities but indicated that the near-term order-to-revenue cycle continues to remain stretched. We expect 16 per cent EBITDA CAGR over FY22-2E. A revival in growth will be key to garnering a better valuation. We maintain our Neutral rating," said Motilal Oswal.

The brokerage sees a 19 per cent upside in the stock at Rs 1,100 against the current market price of Rs 922, it said in a report.

Pavitraa Shetty, Co-founder & Trainer, Tips2Trades said, "Weak global markets with record-high inflation have led to a sharp sell-off, especially in stocks with a very high debt-equity ratio like Tata Communications. Technically, investors can buy for the short term only if there is a green candle on the daily charts for targets of Rs 998- Rs 1,020."

Tirthankar Das, Head of Technical Research, Ashika Group said, "Prices continue to remain in downtrend forming lower low and is on the verge of a breakdown, signaling further downside in the coming session at the breach of the crucial support level of Rs 880- Rs 890. The said level happens to be the 50 per cent retracement of the entire rally since Mar'20 (High: Rs 1592; Low: Rs 200). A key observation is that stock seems to be sustaining above the 200-week exponential moving averages ( Rs 880- Rs 890) after five continuous months of decline. Hence, the present support level at Rs 880- Rs 890 and the sequential decline since the start of CY22 seems to be part of the bullish harmonic group pattern ABCD which indicates that prices might change direction at a sustained close above Rs 1,000, till then outlook continues to remain neutral to negative with a lower target of Rs 730- Rs 760 (61.8% retracement)."

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Meanwhile, ICICI Securities maintained a buy call for the stock with a target price of Rs 1,600, a 73 per cent upside to the current market price of Rs 921.

"Tata Communications organised its annual investor day on June 14, 2022 where it shared certain lead indicators that helped appreciate the company's efforts to drive revenue growth, which was constrained by externalities particularly the supply of equipment.

It stated the company will continue adding to the funnel and improve conversion which should aid accelerate revenue growth as supply normalises. The international market is the key focus area where it sees a significant opportunity to drive growth; it would continue with its efforts to cement India's market position.

Though data services revenue growth was disappointing in FY22, we continue to keep the faith as a management strategy anchored in driving faster and more durable growth. Our estimates remain unchanged with the target price at Rs 1,600 (20x FY24E P/E). Maintain BUY," said ICICI Securities.