Tata Teleservices (Maharashtra) share price was locked in the 5 percent upper circuit on April 6, despite weak market sentiment. The benchmark indices extended losses for the second straight session, shedding more than 1 percent in two days.
The Tata Tele stock closed at Rs 202.70 on the BSE on Wednesday. The stock has more than doubled in the last one month. Comparing from March lows, it gained 116 percent from Rs 93.55, the closing of March 8.
After a run-up in March without any reason, the exchanges sought for clarification on price movement.
In a reply to the exchanges on March 30, the broadband, telecommunications and cloud service provider had said that it had always promptly intimated of any events or information required to be disclosed under the Regulation of the Securities and Exchange Board of India and would continue to do so in future as and when any such event or information occurs in the company.
It turned out to be the second biggest gainer in the BSE 500 index, rising 1,451 percent, in the last one year.
While reasoning for stupendous stock price rally, Santosh Meena, Head of Research at Swastika Investmart said they can't conclusively say whether the company has performed due to any fundamental reasons or not, but the revival of Tata Teleservices in a new avatar called Tata Tele Business Services (TTBS) to focus on small and medium enterprises segments as per media reports, could be a reason for rally in stock price. Remember these media reports were came in last year.
One more point to be noted, he said, was that in a bull run there are many penny stocks which defy gravity and rise without any change in underlying fundamentals.
The Tata Group company's financial performance was not so great, in fact, it had consistently reported losses. The loss in quarter ended December 2021 was at Rs 302.30 crore, against loss of Rs 313.63 crore in September 2021 quarter and loss of Rs 298 crore in the year-ago period.
However, revenue from operations in the third quarter recorded a moderate gain of 2 percent to Rs 284.22 crore, compared to the previous corresponding period, and the sequential growth was 5.7 percent.
Even in the nine months ended December 2021, the loss was Rs 934.4 crore as against a loss of Rs 1,708.4 crore in same period last year, whereas revenue jumped 5.5 percent to Rs 821 crore in the same period.
In a BSE filing on February 8 this year, Tata Teleservices had said the accumulated losses as of December 31, 2021 had exceeded its paid-up capital and reserves. "The company has incurred net loss for the quarter and nine months ended December 31, 2021 and the current liabilities exceeded its current assets as at that date."
The company had obtained a support letter from its promoter indicating that the promoter will take necessary actions to organize for any shortfall in liquidity during the period of 12 months from the balance sheet date.
Based on the above, Tata Teleservices is confident of its ability to meet the funds requirement and to continue its business as a going concern and accordingly, the financial results have been prepared on that basis, said the Tata Group company.
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