MTNL shares hit 5% upper circuit level today; here's why

Shares of Mahanagar Telephone Nigam Ltd (MTNL) saw a sharp uptick in Thursday's trading session. The stock jumped 5 per cent to hit its upper price band of Rs 56.47. At this price, it has gained 69.94 per cent on a year-to-date (YTD) basis. Today's rise in the share price came after telecom PSU said it has entered into a pact with NBCC (India) Ltd.

"This is to inform you that a Memorandum of Understanding (MOU) has been signed between Mahanagar Telephone Nigam Limited (MTNL) and NBCC (India) Limited on September 11, 2024, to collaborate to develop a prominent Land Parcel of MTNL measuring approximately 13.88 acres located on Pankha Road-l Janakpuri, New Delhi," the state-run firm stated in an exchange filing.

"This project aims to transform the land into a state-of-the-art residential/commercial space, leveraging the expertise and resources of both organizations," MTNL added.

The scrip saw high trading volume on BSE as around 10.90 lakh shares were seen changing hands. The figure was higher than the two-week average volume of 8.97 lakh shares. Turnover on the counter came at Rs 6.13 crore, commanding a market capitalisation (m-cap) of Rs 3,557.61 crore.

The counter was trading higher than the 5-day, 100-, 150-day and 200-day simple moving averages (SMAs) but lower than the 10-day, 20-, 30-day and 50-day SMAs. The counter's 14-day relative strength index (RSI) came at 41.92. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a negative price-to-equity (P/E) ratio of 1.05 against a price-to-book (P/B) value of (-)0.14. Earnings per share (EPS) stood at (-)51.30 with a return on equity of (RoE) 13.66.

Last month, the MTNL board signed a service agreement with BSNL for 10 years. The board "accorded its approval to enter into a service agreement between BSNL and MTNL for a period of 10 years or unless it is revoked earlier by giving a notice of six months or extended by mutual consent between the parties, subject to approval of the said service agreement by Department of Telecom / Ministry of Company Affairs," it said.

It has also approved a proposal related to the sale of shares of MTNL in Mahanagar Telephone (Mauritius) Ltd or MTML — an overseas wholly-owned subsidiary — in line with applicable Department of Investment and Public Asset Management (DIPAM) guidelines and other regulatory processes.

The state-owned firm logged Rs 183.9 crore as revenue from operations for the June quarter (Q1 FY25), down by 7.8 per cent year-on-year (YoY), while its net loss narrowed to Rs 773.5 crore. Revenue was at Rs 199.5 crore in the year-ago period, while losses stood at Rs 851.9 crore.

As per MTNL's website, the authorised capital of the telco stood at Rs 800 crore. "The paid-up share capital is Rs 630 crore divided into 63 crore shares of Rs 10 each. At present, 56.25 per cent of equity shares are held by the government and the remaining 43.75 per cent of shares are held by FIIs, Financial Institutions, Banks, Mutual Funds and others including individual investors. MTNL was given Navratna status in 1997 and was listed in New York Stock Exchange in 2001," it mentioned.