Mahanagar Telephone Nigam Ltd. (MTNL) share price was locked at 5% upper circuit at ₹88.06 on Wednesday, extending its rally for the ninth straight session. MTNL shares have more than doubled in the last nine days after hitting back-to-back upper circuit limits.
The rally in MTNL shares began after reports that earlier this month the government deposited ₹92 crore to pay the immediate bond interest dues of the telecom PSU.
In the Union Budget 2024-2025, the government has proposed to allocate ₹3,668.97 crore for payment of principal amount of MTNL bonds.
The government allocated ₹1.28 lakh crore for telecom projects and public sector companies under the telecom ministry. Of the total allocation in the Budget 2024, over ₹1 lakh crore is for BSNL and MTNL-related expenses .
MTNL had earlier announced that it was unable to fund the escrow account for the payment of semi-annual interest on the series VIII-A bonds due to insufficient liquidity.
However, on July 17, the state-owned telecom services provider said that the funding of Designated escrow account for the payment of second semi annual Interest w.r.t. 7.59% MTNL Bond Series VIII-A which is due on 20th July 2024 has been done.
The government earlier had assured that there will be no default on bond dues of MTNL, and said the operations of state-owned telco will be transferred to BSNL even as its asset monetisation efforts to pay off liabilities are underway.
Telecom Minister Jyotiraditya Scindia asserted that the Government of India stands behind the sovereign Guarantee bonds.
“MTNL’s operations will be transferred to BSNL, and monetisation of assets will take place to pay off liabilities. In the interim of monetisation of assets and some bonds coming due, the Sovereign Guarantee Bonds will stand good. 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 given multibagger returns with the shares jumping nearly 109% in one month and over 136% in three months. MTNL stock price has rallied more than 161% year-to-date and the PSU stock has given 345% returns in one year.
At 10:20 am, MTNL shares were still locked at 5% upper circuit at ₹88.06 apiece on the BSE.