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How Tata Group stocks have performed amid the volatility in the market
Since the beginning of the year, Indian stock markets have been on a bumpy ride.
The BSE Sensex swung like a pendulum after reaching an all-time high of 61,200 in January 2022.
The index fell to 52,800 in March 2022, then jumped to 60,000 in April 2022 before falling back to 52,100 in June 2022.
Amid this volatility, even fundamentally strong companies are facing a hard time.
Both the Sensex and Nifty are down over 11% in 2022.
The Tata Group is no exception. However, since the group has companies that span across sectors, some have delivered gains while others have delivered losses.
Here’s a list of top gainers and losers of the Tata Group in 2022 so far.
Top Gainers –
#1 Tata Elxsi
The first on our list is Tata Elxsi.
Shares of the company have zoomed 26% this year on the back of strong growth prospects.
Tata Elxsi focuses on design thinking and application of digital technologies in high-growth verticals that are expected to see strong growth driven by rising research & development spends.
The company is one of the leading global suppliers of design-based technology services across sectors.
Over the last year, Tata Elxsi has had spectacular growth in sales, profitability, and client acquisitions across all important divisions.
The company’s objective for 2023 involves increasing sales, maintaining segment-leading margins of 22%, and managing business risk through revenue diversification.
With a sizeable worldwide clientele, the firm continues to grow its market share and enhance its industry position with aspirations to expand capabilities in healthcare and transportation.
In the transportation sector, the business intends to enter the rail market by collaborating with top operators, and metro and rail authorities throughout the world.
#2 Indian Hotels Company (IHCL)
The second on our list of top gainers is Indian Hotel Company Limited (IHCL).
The stock is up by 18% in 2022 on the back of a positive business outlook.
IHCL also recently announced its ‘Ahvaan 2025’ plan. Under this, IHCL will re-engineer its margins, re-imagine its brandscape, and restructure its portfolio.
The company aims to build a portfolio of 300 hotels, clock 33% operating profit margin with 35% share contribution from new businesses and management fees by the financial year 2025-26.
When discussing hotels in India, it is impossible not to acknowledge the Indian Hotels Company (IHCL). IHCL owns Taj, Vivanta, and Ginger, which are all well-known and elegant hotels.
As Covid-19 had an impact on the hotel industry, IHCL reported a loss for the financial years 2021 and 2022.
However, its company’s performance in these two years does not accurately reflect its position.
The company’s numbers have improved since the lockdown restrictions were eased. It reported a net profit of Rs 71.57 crore for the March 2022 quarter, which is nearly 173% higher than the previous year.
The company also posted its highest ever operating profit margin of 25.3%. High demand in the leisure segment as well as a recovery in business travel has driven growth.
Coming to the top losers…
#1 Tata Teleservices
The first on our list of top losers is Tata Teleservices (Maharashtra) (TTSM).
The company’s shares have plunged by 49% in 2022 on the back of a much-awaited correction.
The stock had become the hottest stock on Dalal Street having rallied 3,000% in one year and 12,800% in two years, despite no change in its balance sheet or business outlook.
The stock has been on the upper circuit for several days with many rumours floating around in social media.
The truth is that TTSM is entangled in losses. The company has only made a profit in 2 of the last 82 quarters.
Its current liabilities also exceed its current assets. The company is heavily in debt. All of these indicators do not bode well for the company.
When TTSM was facing insolvency, Tata Sons provided it with a letter of support. The company invested heavily in TTSM.
For TTSM, a restructuring approach is being implemented. It is being renewed under the name Tata Tele Business Services (TTBS).
In its latest quarterly result, it reported a net loss of Rs 28 crore which was Rs 28.8 crore in the year ago period.
#2 Tata Communications
The second on our list of top losers in 2022 of Tata Group is Tata Communication.
The share price has fallen by 40% in 2022 so far.
Higher capex plans, weaker than expected results, and a slowdown in order conversion impacted the stock.
The company has increased its capital expenditure plans for the financial year 2023 from $250 million to $300-325 million.
This is expected to fuel growth while limiting margin expansion in the short to medium term.
It also reported a 2.2% decline in income from operations to Rs 16,720 crore for the financial year 2021-22 from Rs 17,100 crore a year ago.
However, the company’s focus remains on the data business, and it expects data business growth to accelerate. It intends to grow by double digits over the next two years.
Here’s how Tata Group stocks have performed in 2022…
To conclude…
Tata Group, being one of the most reliable enterprises of the nation has always been on the watchlist of investors and traders.
However, these days, the stock market is extremely volatile. Trends are impossible to forecast. Companies with solid fundamentals are also suffering.
Even companies with strong financials cannot withstand the downturn. Therefore it is important to do due diligence when considering any investment.
Happy Investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
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