Vodafone Idea - Fund-Raising Plan - Angel Broking

Mr. Keshav Lahoti, Associate Equity Analyst, Angel Broking Ltd

"Few weeks back, Vodafone Idea management have already indicated they will be raising funds from the market, although the quantum will be decided once the AGR verdict is declared by the Supreme Court. AGR ruling has given a 10 years staggered payment timeline to clear AGR dues. Board of Directors of the Company is scheduled to meet on September 4, 2020, inter-alia, to consider and evaluate any and all proposals for raising of funds in one or more tranches by way of a public issue, preferential allotment, private placement, including a qualified institutions placement or through any other permissible mode. We think that Company will raise the major amount of funds in the form of equity. The Company will not be able to pay the AGR dues from internal accrual, so it is very important for them to raise funds from the market to survive in the industry.

If Vodafone Idea will be able to raise the desired amount of funds, it will be a positive trigger for the stock. In the short term the next set of key triggers for the stock would be the quantum of funds raised, instruments used to raise funds and from whom funds are raised. Today stock has reacted positively on the news of a fundraising plan by the Company. In the current scenario telecom industry is in a sweet spot, as due to the Jio entry, industry has turned into an oligopoly market. which has huge scope to increase ARPU from current levels. To survive in the industry in the long run, Vodafone Idea needs to raise the required amount of funds, develop a turnaround strategy and hope that industry takes a steep hike in ARPU or suitable floor tariff gets implemented by the TRAI."

Shares of Vodafone Idea Ltd was last trading in BSE at Rs.9.91 as compared to the previous close of Rs. 8.89. The total number of shares traded during the day was 140138197 in over 110095 trades.

The stock hit an intraday high of Rs. 10.1 and intraday low of 9.25. The net turnover during the day was Rs. 1357391862.

Source : Equity Bulls

Keywords