MTNL shares jump 9% today; here's what analysts say

Shares of Mahanagar Telephone Nigam Ltd (MTNL) rose sharply in Monday's trading session. The stock surged 8.70 per cent to hit a day high of Rs 55.36. It was last seen trading 6.32 per cent higher at Rs 54.15. At this price, the scrip has gained 62.96 per cent in 2024 so far. Despite the mentioned rise, it has declined 46.85 per cent from its 52-week high value of Rs 101.88, a level seen on July 29, 2024.

Today's sharp upmove in the share price came amid a report of a revival plan for the cash-strapped telecom PSU. "While MTNL is in talks about restructuring and potential government assistance continues, the company needs to focus on improving its core functions to remain competitive in the ever-changing telecommunications industry," said Atul Parakh - CEO at Bigul.

"For MTNL, there is no fundamental business as of now. It is more about restructuring and capital infusion is needed. Investors who entered this stock at lower levels can book some profit. It is a speculative bet rather than a fundamental theme," said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.

Technically, support on the counter could be seen in the Rs 51-50 zone.

"The stock looked strong on daily charts and has potential to hit an upside target of Rs 60 in the near term. Keep stop loss placed at Rs 51," said Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking.

"Support will be Rs 50 and resistance Rs 59. A decisive close above Rs 59 level may trigger a further upside towards Rs 64. The expected trading range will be between Rs 48 and Rs 65 for the short term," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi.

"MTNL stock price is bullish on daily charts with strong support at Rs 50.2. A daily close above resistance of Rs 54 could lead to an upside target of Rs 63.2 in the near term," said Sebi-registered research analyst AR Ramachandran.

The company's stock has a negative price-to-equity (P/E) ratio of 0.99 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.

Around 7.73 lakh shares were seen changing hands. The figure was slightly lower than the two-week average volume of 7.78 lakh shares. Turnover on the counter came at Rs 4.12 crore, commanding a market capitalisation (m-cap) of Rs 3,365.46 crore.

The MTNL board signed a service agreement with BSNL for 10 years in August. The board "accorded its approval to enter into a service agreement between BSNL and MTNL for 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 stated.

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 at the New York Stock Exchange in 2001," it mentioned.