Is Tata Teleservices stock a good buy as losses mount?

Tata Teleservices (NSE: TTML) share price has plunged to the lowest level since November 2021 as concerns about the company’s growth and profitability remain. The stock was trading at ₹66.7 on Thursday, meaning it has plunged by over 77% from its highest point in 2022. It has also underperformed the Nifty 50 and Sensex indices.

Growth slows and losses mount

Tata Teleservices, an Indian company, has come under intense pressure in the past few months as competition has risen. Results published two weeks ago showed that its total revenue for the fourth quarter came in at 284 cores, down from 285 crores that it made in the same period in 2021.

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

The decline in revenue happened even as the Indian economy did well and other companies outperformed. On the positive side, the company managed to cut some costs, which helped bring the total loss after tax to 279 crore from the previous 302 crores. 

For the nine months to December, the company’s revenue was 832 crore while its loss came in at over 867 crore. Therefore, the accumulated losses have been more than its paid-up capital and reserves. Its balance sheet is also not doing well, with its current liabilities exceeding its current assets. 

Therefore, the performance of the Tata Teleservice’s share price is a reflection that investors are worried about the company. Competition has risen, which has slowed its growth. Also, it faces substantial financing challenges. 

In its report, the company said that it had obtained a support letter from the parent company indicating that it will organize any shortfall in liquidity. Such support will likely add to more debt or dilute existing shareholders.

Other Tata companies doing well

Tata Teleservices is a subsidiary of Tata Group, one of India’s sprawling conglomerates. The company, which is known as Tata Tele Business Services, provides IT solutions to other firms and individuals. It has a fibre optic cable that spans over 130k kilometers in the country. Also, it has a wide portfolio of additional services in security, SaaS, and marketing solutions.

Other parts of Tata Group are doing modestly well as the Indian economic growth story accelerates. Tata Motors stock has soared by over 612% from the lowest point in 2019. Similarly, Tata Consultancy stock has soared by 150% from its 2020 low and is nearing its all-time high. Tata Steel, Tata Power, and Tata Consumer Services shares are also doing modestly well.