TATACOMM - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.9
| Stock Code | TATACOMM | Market Cap | 44,638 Cr. | Current Price | 1,565 ₹ | High / Low | 2,004 ₹ |
| Stock P/E | 63.2 | Book Value | 355 ₹ | Dividend Yield | 1.60 % | ROCE | 6.39 % |
| ROE | 5.93 % | Face Value | 10.0 ₹ | DMA 50 | 1,712 ₹ | DMA 200 | 1,729 ₹ |
| Chg in FII Hold | 0.85 % | Chg in DII Hold | -0.54 % | PAT Qtr | 306 Cr. | PAT Prev Qtr | 155 Cr. |
| RSI | 33.9 | MACD | -60.2 | Volume | 1,39,383 | Avg Vol 1Wk | 4,28,602 |
| Low price | 1,291 ₹ | High price | 2,004 ₹ | PEG Ratio | -3.24 | Debt to equity | 0.55 |
| 52w Index | 38.5 % | Qtr Profit Var | 127 % | EPS | 46.4 ₹ | Industry PE | 39.0 |
📊 Analysis: TATACOMM shows weak long-term fundamentals with ROE at 5.93% and ROCE at 6.39%, both below compounding benchmarks. The P/E of 63.2 is significantly higher than the industry average of 39.0, suggesting overvaluation. The PEG ratio of -3.24 highlights poor growth prospects. Dividend yield of 1.60% provides modest passive returns. Technicals show weakness with RSI at 33.9 and MACD at -60.2, indicating bearish sentiment. The ideal entry zone lies between 1,300–1,400 ₹ for margin of safety. For existing holders, consider a medium-term horizon with partial exit near 1,700–1,750 ₹ resistance unless profitability improves significantly.
✅ Positive
- Market cap of 44,638 Cr. provides scale and stability in telecom services.
- Dividend yield of 1.60% offers modest passive income.
- Quarterly PAT growth (306 Cr. vs 155 Cr.) shows strong earnings momentum.
- FII holdings increased by 0.85%, reflecting foreign investor confidence.
- EPS of 46.4 ₹ provides valuation support.
⚠️ Limitation
- Low ROE (5.93%) and ROCE (6.39%) limit long-term compounding potential.
- High P/E (63.2) compared to industry average (39.0).
- Negative PEG ratio (-3.24) highlights poor growth prospects.
- DII holdings decreased by -0.54%, showing reduced domestic confidence.
📉 Company Negative News
- MACD at -60.2 indicates strong bearish momentum.
- Stock trading at only 38.5% of 52-week index range, reflecting weak sentiment.
📈 Company Positive News
- Quarterly profit variation (+127%) shows significant operational improvement.
- Foreign institutional investors increasing stake.
- Dividend yield supports investor returns despite weak fundamentals.
🏭 Industry
- Telecom and digital services sector benefits from rising data demand and enterprise connectivity.
- Industry P/E at 39.0 suggests TATACOMM trades at a steep premium.
- Structural drivers: digital transformation, cloud adoption, and global connectivity expansion.
🔎 Conclusion
TATACOMM earns a rating of 2.9 due to weak ROE/ROCE and expensive valuations despite strong quarterly profit growth. Long-term investors should only consider entry in the 1,300–1,400 ₹ zone for margin of safety. Current holders may adopt a medium-term horizon, with partial profit booking near 1,700–1,750 ₹ resistance unless profitability improves. The stock remains a speculative telecom play rather than a strong long-term compounding candidate.