Vodafone Idea stock rises nearly 10% on unconfirmed fund raising buzz , details
Vodafone Idea (Vi) shares closed approximately 10 per cent higher on the BSE Friday, in between the unconfirmed speculation that the cash-strapped telco may finally be able to concluding at least a part of its much-delayed fundraising, market players mentioned
On Friday, the stock closed 9.86 per cent higher at Rs10.36 after scaling an 11.24 per cent intra-day high, amid unconfirmed buzz that the telecom JV between UK’s Vodafone Plc and the Aditya Birla Group might be close to wrapping up an initial funding of around $1 billion, via a potential qualified institutional placements (QIP) route. The Vi scrip has jumped over 21 per cent since the start of this month – from Rs 8.53 on June 1 to Rs 10.36 on June 18.
“Markets these days largely run on expectations and euphoria and any near-term positive perceptions about Vi likely overcoming its immediate funding challenges could have triggered the sharp spurt in the company stock price today,” Deven Choksey, promoter of KRChoksey Wealth Managers said in an interview with ET.
Spokespersons for Vi, Vodafone Plc and the Aditya Birla Group did not reply to ET queries till press time. The telco is yet to report its fiscal fourth quarter results, which is expected at the end of June.
“Vodafone Idea needs to raise the stated Rs 25,000 crore funding in the short-term to refinance its upcoming NCD redemption, clear its sizeable AGR dues repayments and also invest in 4G networks to compete effectively with Reliance and Bharti Airtel, failing which it could face significant financial challenges,” Nitin Soni, senior director, at global ratings agency, Fitch, told ET in an interview.
The telco has been unable to increase tariffs meaningfully due to competitive pressures, even as it faces big payment obligations upwards of Rs 13,500 crore in the current fiscal itself. The telco is staring at a Rs 6,000-crore payout towards redemption of non-convertible debentures (NCDs) — starting December 2021 — and the first instalment of its Adjusted Gross Revenue (AGR) -linked repayments pegged at around Rs 7,500 crore, due by March 31, 2022.
Industry analysts have maintained that fundraising has been a challenge for Vi, given its weak financial performance and rapid loss of users. Prospective global investors also want its co-promoters – UK’s Vodafone Plc and the Aditya Birla Group – to infuse some capital. However, both promoters have so far stuck to their stance not to put in fresh equity in the loss-making telco.