Despite the frenetic activity, Vodafone has been one of the major laggards in the recent stock market rally.
Vodafone Idea set a new record for volumes in a single stock, with over 1,055 crore shares being traded till now on the BSE and NSE combined on April 25.
This figure bettered the previous record of 308 crore shares traded on April 23, again held by Vodafone.
Amid this massive trading activity, Vodafone shares experienced a rollercoaster ride, rocketing to 25 percent above the FPO price of Rs 11, peaking at Rs 13.75 during morning trade. Despite the frenetic activity, Vodafone has been one of the major laggards in the recent stock market rally.
The renewed interest in the stock is because of the company successfully raising Rs 18,000 crore in India's largest FPO, with backing from some noted institutional investors.
he FPO garnered overwhelming demand, getting subscribed 6.36 times on the final bidding day. Qualified institutional buyers led the charge, subscribing 17.56 times their portion, while non-institutional investors secured 4.13 times their quota. The retail segment saw full subscription.
Vodafone Idea aims to deploy Rs 12,750 crore of the net proceeds to bolster its network infrastructure, including the establishment of new 4G and 5G sites, and augmenting the capacity of existing 4G sites.
IIFL upgraded Vodafone Idea (Vi) to ‘Add’ with a target price of Rs 14 and had recommended subscribing to the FPO. Additionally, Indus Towers was rated a buy with a target price of Rs 379, as it is expected to reap the rewards of Vi's strengthened financial position, forthcoming expansions, and potential dividend reinstatement.
"We anticipate two rounds of tariff increases in the next three years, benefiting all three telcos. There's a decent likelihood of a reduction in AGR liability, which would be a boon for Bharti and Vi," stated IIFL in its latest analysis.
The infusion of equity into Vi, potentially coupled with debt raising, could amount to a hefty Rs 45,000 crore, narrowing its 4G gap with competitors. This strategic move may stem subscriber losses and expedite the migration of 2G users to 4G. With direct tariff hikes, Vi's ARPU could ascend from Rs 145 in 3QFY24 to Rs 241 in FY27.
A section of the market is optimistic of a favorable verdict in the AGR curative petition, possibly alleviating 50 percent of the Rs 70,000-crore AGR dues. The target price assumes Rs 35,000 crore government dues getting converted into equity.
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