MTNL Stock Plummets 8% After Defaulting on ₹8,277 Crore Loan Payments to Seven Banks
MTNL Stock : Mumbai, India: Shares of Mahanagar Telephone Nigam Limited (MTNL), the state-owned telecom operator, tumbled nearly 8% during Monday’s trading session on the Bombay Stock Exchange (BSE) after the company disclosed a default of ₹8,277 crore in loan repayments to seven major banks, including SBI, PNB, and Union Bank of India.
Stock Price Movement
- At 2:27 PM, MTNL shares were trading at ₹45.32, marking a 7% decline from its previous closing price of ₹48.78.
- The stock has delivered positive returns of 33% over the past year but has suffered a sharp 8% decline in the last month.
Major Default: ₹8,277 Crore Loan Non-Payment
According to regulatory filings, MTNL has defaulted on both principal and interest payments to seven public sector banks, namely:
✅ Union Bank of India (UBI)
✅ State Bank of India (SBI)
✅ Punjab National Bank (PNB)
✅ Bank of India (BOI)
✅ UCO Bank
✅ Punjab & Sind Bank (PSB)
✅ Indian Overseas Bank (IOB)
🔴 Total Outstanding Loan: ₹8,277 crore
🔴 Breakdown of Default:
- Overdue Principal: ₹1,450.36 crore
- Overdue Interest: ₹482.97 crore
- Default Period: August 2024 – February 2025
This adds to MTNL’s total financial debt, which has now ballooned to ₹33,497 crore, comprising:
- ₹8,277 crore in bank loans
- ₹24,071 crore in SG Bonds
- ₹1,149 crore loan from the Department of Telecommunications (DoT)
Previous Defaults and Financial Struggles
MTNL has been struggling with financial distress for years. In November 2024, the company defaulted on a ₹1,000 crore loan from Bank of India (BOI), prompting the lender to make a ₹200 crore provision in its financial reports.
🔴 Past Defaults (As of August 2024):
- Total Outstanding Debt: ₹31,944.5 crore
- Total Defaulted Payments: ₹5,726.3 crore
- Principal Defaulted: ₹5,492 crore
- Interest Defaulted: ₹234.2 crore
Key lenders impacted in August 2024:
- Union Bank of India (₹3,480.8 crore)
- Bank of India (₹1,039.7 crore)
- Punjab National Bank (₹447.6 crore)
Government’s Rescue Plan
The Indian government has stepped in with a ₹16,000 crore revival plan to help MTNL and BSNL. This includes:
✔ Sale of assets from both telecom firms to reduce debt
✔ Potential merger of BSNL and MTNL to improve financial health
✔ Government support for clearing debt obligations
MTNL’s Deteriorating Financials
The company has been witnessing continuous losses, with shrinking revenue and a high debt burden:
📉 Quarterly Financials
| Financial Metric | Q3 FY24 | Q3 FY25 | Change (%) |
|---|---|---|---|
| Revenue from Operations | ₹192 Cr | ₹170 Cr | ⬇ 11.5% |
| Net Loss | ₹839 Cr | ₹836 Cr | ⬇ 0.4% |
📊 Key Financial Ratios
| Metric | Value |
|---|---|
| Market Cap | ₹2,849 Cr |
| Current Price | ₹45.1 |
| 52-Week High/Low | ₹102 / ₹31.2 |
| Stock P/E | N/A |
| Book Value | ₹-401 |
| Dividend Yield | 0.00% |
| ROCE (Return on Capital Employed) | -8.18% |
| ROE (Return on Equity) | N/A |
| Face Value | ₹10.0 |
What’s Next for MTNL?
Despite government intervention, MTNL’s financial woes are deep-rooted. The company continues to report losses, and its inability to generate sustainable revenue raises concerns about its long-term viability.
While the telecom industry has seen rapid growth with players like Reliance Jio and Bharti Airtel, MTNL has struggled due to high operational costs, outdated infrastructure, and debt dependency.
With a potential BSNL-MTNL merger on the horizon, the company’s future now largely depends on successful government restructuring efforts.
Q&A: Quick Summary for Easy Understanding
Q1: Why did MTNL’s stock crash by 8%?
A: MTNL defaulted on ₹8,277 crore in loan payments to seven public sector banks, causing investor panic and a sharp decline in stock price.
Q2: Which banks are affected by MTNL’s loan default?
A: SBI, PNB, Union Bank of India, Bank of India, UCO Bank, Punjab & Sind Bank, and Indian Overseas Bank.
Q3: What is MTNL’s total debt?
A: MTNL has ₹33,497 crore in total debt, including loans, bonds, and government borrowings.
Q4: How is the government helping MTNL?
A: The government has announced a ₹16,000 crore plan to raise funds through asset sales and possibly merge MTNL with BSNL.
Q5: Is MTNL a good stock to buy?
A: The stock is highly volatile and risky, with huge debt and continuous losses. Investors should carefully assess the company’s turnaround potential before investing.
This news highlights MTNL’s financial struggles and the broader challenges faced by state-run telecom companies. The government’s support will be crucial in determining the future of this once-dominant telecom player.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.