TTML Share Price Locked in Upper Circuit After Co Opts Out of Conversion of AGR Dues – Should You Invest in TTML?

TTML share price was locked at 5 percent upper circuit for 3 consecutive sessions from 2nd February 2022 after the company announced its decision to withdraw the plan to convert its Adjusted Gross Revenues (AGR) dues into equity.

“As the interest amount eligible for conversion is much lesser than as expected & calculated by Tata Teleservices (Mah), the company’s board of directors, in its meeting held on 1st February, 2022, has decided to withdraw the desire expressed for conversion & inform Department of Telecommunications (DoT) that the company is not desirous of opting for conversion of interest into equity,” the company said in a statement.

The current announcement has come at a time when the TTML share has continuously been hitting lower circuits for the last few days, crashing 51% from Rs 290.15 to Rs 141.75. A few weeks earlier, the company had announced its desire to convert the full interest amount pertaining to AGR dues into equity.

TTML is a major player in the connectivity and communication solutions and caters to the market, serving enterprise customers. Services offered by the company include connectivity, collaboration, cloud, security, IoT and marketing solutions. 48.30% stake in TTML is owned by Tata Tele, while 19.58% and 6.48% stake in the company are held by Tata Sons and Tata Power, respectively.

Reasons for the surge in TTML share price

Shares of the company, which were trading at around Rs. 18 levels on 1st February 2021, had surged to touch a 52-week high of Rs. 290.15 with many rumours floating around the company on social media platforms. A media report published on 30th June 2021 also stated that the Tata Group is looking at reviving Tata Teleservices by taking technical expertise and enterprise solutions for its proposed Super App, which is expected to bring all products and services of the Tata Group under a single platform and enable direct customer sales.

Should You Invest in TTML?

Although losses of the company have reduced by almost 50% from 3714.11 crores in FY20 to Rs. 1996.69 in FY21, TTML’s total debt for FY21 stood at Rs. 17794.22 crores.

While a turnaround in future may be possible, given the strong backing of the company’s promoter group, at the current stage the valuations appear quite expensive. Besides, in the absence of any official confirmation whether TTML will lead the development of the proposed Super App and weak fundamentals at present, investors should exercise caution while investing.

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– Written and contributed by Pradeep Sukumaran.