Telecom Plus PLC 

Telecom Plus PLC (LSE: TEP) is an FTSE 250 index-listed multi-utility supplier company based in the United Kingdom. It supplies gas, electricity, landline, broadband, and mobile services to residences and businesses. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Rationale – Sell at GBX 1,766.00

• Resistance near Current levels: TEP’s stock price crossed the Resistance (R2) stated in the previous report on 07 February 2024, and might witness some sell-off from the current levels. Considering the market conditions and the price action, it is prudent to exit the stock, as the prices might pull back from these levels.
• Expensive Valuation: The stock of TEP is currently offered at 10.5x on EV/EBITDA-based relative valuation (NTM) as compared to the industry (Utilities) median of 7.0x. Also, the stock is currently trading at 14.6x on Price/ Earnings based relative valuation compared to the industry median of 12.2x.
• Sluggish Profitability Margins: In H1 FY24, the Gross margin of TEP was 18.7% against the industry median of 8%, and the EBITDA margin declined to 5.4% in the reported period (H1 FY24) as compared to the industry median of 15.9%. Also, the net margin slipped to 2.6% in H1 FY24 versus the industry median fo 3.4%.

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on Telecom Plus PLC (LSE: TEP) has been given at the current market price of GBX 1,766.00 (as of 02 May 2024, 08:40 AM GMT+1).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 02 May 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.