MTNL shares double in seven trading sessions after govt release funds for bond payment

The share price has doubled in the last seven trading sessions and the stock rally started after the government deposited ₹92 crore to pay the immediate bond interest dues earlier this month.

The state-owned telecom service provider had announced earlier on July 11, that it was unable to replenish the escrow account for the payment of semi-annual interest on the series VIII-A bonds due to insufficient liquidity.

"We would like to inform you that the funding of Designated ESCROW Account for Payment of 02nd Semi-Annual Interest w.r.t. 7.59% MTNL Bond Series VIII-A (INE 153A08154) which is due on 20th July 2024 has been done on 17.07.2024," said MTNL in a communication to the exchanges.

Meanwhile, Telecom Minister Jyotiraditya Scindia recently assured that there will be no default on bond dues of MTNL, and said the state-owned telco's operations will be transferred to BSNL even as its asset monetisation measures to pay off dues are underway.

"In the interim of monetisation of assets and some bonds coming due, the Sovereign Guarantee Bonds will stand good. The government of India stands behind those bonds and there will be no default and that is what you have seen," Scindia said.

MTNL stock has gained 100% in the last one month and over 150% year to date. Meanwhile, the benchmark, the Nifty 50 index has gained 4.3% in the last one month. At the current market price of ₹83.87, the company’s market capitalisation stands at ₹5,283.8 crore. The stock touched a 52-week low of ₹19.37 on July 28, 2023. The stock has a RoE of 10.64%.