LIC, mutual funds, FIIs just lap up this Tata stock, but Jhunjhunwala cuts his stake

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The country’s biggest institutional investor Life Insurance Corporation of India together with mutual funds and foreign institutional investors have increased their stake in Tata Communications during the latest quarter ended March 31.

The latest shareholding data showed that LIC’s bought 2.17% or 61,81,894 shares in the company. It was not among the key shareholders of the company during the previous quarter ended December 31. Likewise, mutual funds holdings increased to 4.01% in Q4FY21 from 0.41% in Q3FY21. Overseas investors, or FPIs, also raised their holdings to 24.40% from 17.65% during the same period.

On the other hand, ace equity investor Rakesh Jhunjhuwala offloaded 2,50,000 shares of Tata Communications. His stake in the company stood at 1.04% as of March 31 against 1.12% in the preceding quarter ended December 31.

Shares of the company traded 1.15% higher at Rs 1,127 at around 11.40 am (IST), while the benchmark BSE Sensex was up 0.37% at 48,983 at around the same time.

Brokerage ULJK Institutional Research in March gave a ‘Buy’ rating to Tata Communications with a price target of Rs 1,550.

“The Company has guided for a capex of around Rs 1,700-1,800 crore for the entire year FY21E. Tata Communications is very rigorous and has a tight discipline against Capex approvals. Cost initiatives taken by the company drove EBITDA growth during Q3FY21. We expect further expansion of EBITDA margins with increasing growth in the data business and cost reduction,” the brokerage said.

Likewise, global brokerage firm CLSA also gave a ‘Buy’ rating to Tata Communications in March with a price target of Rs 1,475. “Tata Communications has been deleveraging and net debt has reduced to Rs 8,000 crore (Rs 9200 crore in FY20), and gearing is comfortable at 1.9x (2.8x in FY20) Ebitda. Also, post-Tata Communications demerger of 739 acres of land to Hemisphere Properties, the company still has another 756 acres of surplus land, which can likely see value unlocking,” CLSA said.