Tata Teleservices locked in 5% lower circuit as company opts for equity conversion of AGR interest dues—what should investors do?

Shares of Tata Teleservices (Maharashtra) were locked in 5 per cent lower circuit on the BSE in Wednesday's intraday trade after the company on Tuesday said it will opt for conversion of the interest related to AGR dues into equity. Tata Teleservices (Maharashtra), shares of which have surged nearly 3,000 % in the last one year, informed that post-conversion, the government holding is expected to be about 9.5 per cent in the company. 

The net present value (NPV) of this interest is expected to be nearly Rs 850 crore as per the company's best estimates, subject to confirmation by the Department of Telecom, it said in a regulatory filing. 

At 9.30 am, shares of this telecom services provider declined by Rs 14.55 or 5% to Rs 276.50 per share on the BSE on Wednesday. Shares of TTML have surged 473% in three months, 524% in six months and whooping 2712% in the last one year as on January 12, 2022, showed technical data of the telecom share.  

See Zee Business Live TV Streaming Below:

Nearly 3,000% return in one year; Will the Party Stop here?

Manoj Dalmia, founder and director, Proficient equities Private limited, said TATA Teleservices has given about 3000% return in the last year, but this rally might stop.  

"There is a lot of speculation around this stock daily hitting upper and lower circuits. We might expect the stock to hit the lower circuit as it will create a panic. Tata Teleservices has an AGR due of Rs 16798 crore, out of which Rs 4197 crore has been paid. The initiative seems good as converting such debts is beneficial for both government and company," said Dalmia.  

On the technical front Tata tele services has higher and higher low on the daily charts and is currently placed above the short-term EMAs in the daily frame, said Ravi Singh, Vice President and Head of Research, ShareIndia.  

"In the recent past after checking a high of 290 levels, the stock has formed a base of around 270 levels on the lower side and is all set to move higher. Overall, chart structure of the counter looks bullish from current level and is witnessing to move towards 320 levels," he added. 

As per the company's filing, the average price of the company's shares at the relevant date of August 14, 2021, as per the calculation method provided in the DoT communication works out to be about Rs 41.50 per share, subject to final confirmation by the telecom department.  

Earlier on Tuesday, Vodafone Idea (VIL) had said it has decided to opt for converting about Rs 16,000 crore interest dues liability payable to the government into equity, which will amount to around 35.8 per cent stake in the company.  

Promoter shareholders Vodafone Group would hold around 28.5% and Aditya Birla Group around 17.8%.