This Jhunjhunwala stock approaches 52-week low, time to buy?

Shares of Tata Communications approached their 52-week low today. The Tata Group stock closed shy of Rs 906.3, its 52-week low, in the previous session.  It was trading 3.71 per cent away from its 52-week low today.  

The stock, which forms part of ace investor Rakesh Jhunjhunwala's portfolio, was trading 2.82 per cent or Rs 26 higher at Rs 944.45 in the afternoon session today.  

Rakesh 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.

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Tata Communications stock ended at Rs 918.55 in the previous session. The large-cap stock has gained after seven days of consecutive fall.  

The stock touched an intraday high of Rs 941.3 rising 2.48 per cent on BSE.  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 23.24 percent and lost 35.54 per cent this year.  

The large-cap stock hit a 52-week low of Rs 906.30 on May 26, 2022. It touched a 52-week high of Rs 1590 on January 17, 2022.  

Pavitraa Shetty, Co-founder & Trainer, Tips2Trades said, "Despite a sharp correction in the majority of the stocks in recent times including Tata Communications, this stock looks like bottoming out currently. Technically, we have a positive divergence and investors can buy at current levels keeping support of Rs 906 as a stop loss for targets of Rs 1017- Rs 1122 in the near term."

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 The Tata Group firm reported a 22 percent YoY rise in Q4 profit.  

Net profit rose to Rs 365 crore in the March 2022 quarter, helped by higher other income which majorly included tax refunds and interests.  Profit stood at Rs 299.20 crore in the corresponding quarter of the previous fiscal.  

 Revenue climbed 4.6 percent to Rs 4,263 crore in same period driven by data services segment, which contributed the most to revenue.  Revenue in the corresponding quarter last year came at Rs 4073 crore.  

The board recommended a dividend of Rs 20.7 per share for the year, as a result of the company reporting strong profitability.

In the last fiscal, the company recorded a net profit of Rs 1,482 crore, up 18 per cent year on year. Revenue slipped 2 per cent to Rs 16,725 crore in FY22.

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Ravi Singh, vice President and head of Research, Share India

"Tata Communications has posted weak set of numbers for the March quarter with lower EBITDA, higher D&A and taxes. The revenue growth was good but higher operating expenses led to a lower EBITDA. However, the PE on FY24E EPS makes the company’s valuation attractive. The management has also shown willingness to invest both in capex and opex for a growth pull back and an accelerated revenue. The improvement in the order book funnel helps to tackle the headwinds due to underperformance of usage based services. On technical setup also, TataComm is bullish on momentum indicators and lower levels buying has been triggered in the counter. The stock may touch the levels of 1050 in near term."

Manoj Dalmia, founder and director, Proficient equities Private limited

"TATA Communications is 40% down from the top and is currently at 52 week low,it gave of closing of Rs 958 and was 4.16% above the opening. Short term Investors can accumulate the stock at current levels as it has approached a key support area the nearest target can be Rs 1184 on the upside, currently the trend is not bullish but investors can accumulate at dips. The company is poised for growth considering the evolution in the communication space and brand equity it has, it can be a good bet for the long term also the profit margins have been increasing for the last two years and might continue as the communication space evolves.

Currently, it has a P/E of 18.58 and even ROCE is above 20% which is quite underrated considering the scale of its business and the order book it has compared to its peers.. The cash flow from operating activity is also increasing it was Rs 3180 Cr  PY and Rs 4204 Cr in the current year."

Ravi Singhal, Vice Chairman, GCL Securities Limited

"As we know, Tata Communications Carter's 30 percent of global internet routes and 60 percent of global business are impacted by a shortage of chip and commodity prices, as well as high employee costs. A delay in 5G is also a factor, but at this price it is reasonably priced. We offer long-term accumulation for target  Rs 1250 to Rs 1400 stop loss of Rs 840."

 After the earnings, financial services firm Motilal Oswal gave a neutral rating to the stock on April 22 this year.  

"We have cut our FY23 EBITDA estimate by 4 per cent to factor in 16 per cent EBITDA CAGR over FY22-24, in anticipation of a recovery in usage-based revenue and new orders. Our estimates factor in risk from the continuation of the downward revision cycle as our expectation of double-digit earnings growth is largely dependent on the Digital platform and Services, which contribute 20 per cent to total revenue, and has grown at 10 per cent over the last three years. We maintain our Neutral rating," the brokerage said.

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