In a surprising move, Tata Teleservices (TTML) has witnessed a sharp rally of around 35% over the last two trading sessions. This surge comes after a long period of underperformance. Year-to-date, the stock was down nearly 25%, and on a one-year basis, it had dropped approximately 27%. However, the recent momentum has helped the stock recover most of its past losses within just two days.
The rally is driven by reports suggesting that Tata Sons is planning to infuse fresh capital into its telecom company, TTML. Since June 2019, Tata Sons has already invested around ₹46,595 crore into the telecom arm in efforts to stabilize the company. This new round of funding appears to be in response to the growing financial burden on telecom companies related to Adjusted Gross Revenue (AGR) dues.
The need for additional capital has become more critical after the Supreme Court recently denied relief to telecom companies in the AGR case, advising them to approach the government instead. This means that telecom companies, including TTML, may have to pay significant amounts towards AGR liabilities in the near future.
As of 2024, the outstanding AGR dues on TTML are reported to be around ₹17,870 crore. By 2025, including interest and penalties, this amount could reach approximately ₹19,256 crore. It is expected that Tata Sons might match this liability with a capital infusion of a similar scale to ensure the survival and long-term stability of the company.
Market participants are closely watching how much funding Tata Sons will actually infuse into TTML. The sharp rise in the stock price reflects investor optimism regarding the company’s future prospects and the parent group's commitment to keeping it afloat.
With the AGR issue looming large and the telecom sector under pressure, this infusion will be crucial for TTML’s operational continuity. The coming months will be key in determining how effectively the company navigates this financial challenge.
Disclaimer:
The content provided in this article is for informational and educational purposes only and does not constitute financial, investment, or trading advice.
