This Jhunjhunwala Stock Recovers 5% From 52-Week Low, Gains After Four Days
Shares of Tata Communications staged a smart rally today, rising more than 5% from their 52-week low in the previous session. Tata Communications shares hit a 52-week low at Rs 856, losing 7.12% intraday on June 15 against the previous close of Rs 921.65 on BSE.
It hit an intraday high of Rs 904, up 3.25% today. The stock is up 5.60% or Rs 48 from its 52-week low in the current session. He won after four losing sessions.
Shares of Tata Communications are trading below the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
In one year, the stock fell 32% and lost 39.56% this year. It reached a 52-week high of Rs 1,590 on January 17, 2022.
The stock is part of the portfolio of investor as Rakesh Jhunjhunwala. Jhunjhunwala invested in the business through his wife Rekha Jhunjhunwala. According to Tata Communications shareholding scheme for the quarter ended March 2022, Rekha Jhunjhunwala held 30,75,687 shares or a 1.08% stake in the company.
The company held its investor meeting on June 14. However, the stock fell to its lowest level in 52 weeks in the following session amid negative investor sentiment in the broader market.
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Here’s a look at what brokerages and analysts said about the stock’s outlook after the investor meeting.
“Management guided double-digit growth at its analyst meeting to highlight its new-era capabilities and growth opportunities, but indicated that the near-term order-to-revenue cycle continues to remain tight. We expect an EBITDA CAGR of 16% in FY22 -2E. Resumption of growth will be essential to achieve better valuation. We maintain our Neutral rating,” said Motilal Oswal.
The brokerage sees a 19% rise in the stock to Rs 1,100 from the current market price of Rs 922, it said in a report.
Pavitraa Shetty, co-founder and trainer of Tips2Trades, said: “Weak global markets with record high inflation led to strong selling, especially in stocks with a very high leverage ratio like Tata Communications. Technically, investors can buy short term only if there is a green candle on the daily charts for targets of Rs 998 to Rs 1,020.”
Tirthankar Das, Head of Technical Research, Ashika Group, said: “Prices continue to remain in a downtrend, forming a lower low and are on the verge of a breakout, signaling further decline over the next session at the breakout of the crucial support level of Rs 880-Rs 890. Said level happens to be the 50% retracement of the entire rally since March 20 (high: Rs 1592; low: Rs 200). The key is that the stock appears to be holding above the 200-week exponential moving average (Rs 880- Rs 890) after five continuous months of declines.Therefore, the current support level at Rs 880-Rs 890 and the sequential decline since the start of CY22 appear to be part of the ABCD bullish harmonic group pattern which indicates that prices may change direction at a sustained close above Rs 1,000, until then the outlook continues to remain neutral at negative with lower objective lower from Rs 730 to Rs 760 (61.8% retracement). »
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Meanwhile, ICICI Securities maintained a buy call for the stock with a target price of Rs 1,600, up 73% from the current market price of Rs 921.
“Tata Communications held its annual Investor Day on June 14, 2022 where it shared some leading indicators that helped appreciate the company’s efforts to drive revenue growth, which has been constrained by externalities including the supply of equipment.
He said the company will continue to add to the funnel and improve conversion, which should help accelerate revenue growth as supply normalizes. The international market is the main focus area where he sees a significant opportunity to drive growth; it would continue its efforts to consolidate India’s position in the market.
Although data services revenue growth was disappointing in FY22, we continue to believe in a management strategy anchored in faster and more sustainable growth. Our estimates remain unchanged with the target price at Rs 1,600 (20x FY24E P/E). Hold the BUY,” ICICI Securities said.