After financing ₹3,300 crore through secured NCDs to support capital expenditure, Vodafone Idea's share price increased 6% to ₹12. Due to favorable market conditions, analysts are hopeful about the company's future performance as it recovers from large government dues.
On Friday, December 19, the telecom giant Vodafone Idea announced that it had raised ₹3,300 crore through secured non-convertible debentures (NCDs), which is anticipated to support the company's capital expenditure program and business growth. As a result, the share price of the company closed higher for the second consecutive session, rising 6% to ₹12 per share.
Vodafone Idea Telecom Infrastructure Ltd (VITIL), a division of Vodafone Idea, conducted the fundraising. According to the company's filing on Wednesday, interest in the issue from overseas portfolio investors, alternative investment funds, and major non-banking financial businesses surpassed the NCD issuance.
Only eight weeks had passed since the Supreme Court gave the financially troubled firm a new lease on life. The telco is coming out of a challenging time when it was in danger of going bankrupt due to ₹2 trillion in outstanding payments to the central government. Following an injunction from the Supreme Court in late October, the dues are currently being reviewed.
As of the end of September, Vodafone Idea's AGR liabilities alone totaled ₹78,500 crore of the ₹2 trillion owed. Payments owed to the government for wireless spectrum acquired through auctions make up the majority of the remaining sum.
The enormous amount of the debt has drawn criticism from analysts, who also stated that the company's future hinges on any waivers it may eventually obtain from the government.
The company intends to spend between ₹7,500 crore and ₹8,000 crore on capital expenditures during the current fiscal year. It has already spent ₹4,200 crore in the first half of the current fiscal year to expand 5G services and enhance 4G network coverage.
The share price of Vodafone Idea yields returns of around 100%.
Due to a number of favorable factors that have created the conditions for the stock to become a top performer on Dalal Street in 2025, Vodafone shares have experienced a significant reversal in trend in recent months and have remained higher since August.
Following a two-year low in August, the shares recovered well and have since risen 96% as the company's better-than-expected September-quarter results enhanced public perception of the telecom giant. The ongoing protest has also been bolstered by reports of additional tariff increases for the upcoming year and the Supreme Court's decision to permit the government to explore full relief on Vodafone Idea's debts.
After more than a year, the stock is currently trading comfortably above its FPO price of ₹11, which it first surpassed in mid-November. With a favorable technical setup, analysts anticipate that the stock will continue to rise.
"The Vodafone Idea share price is on the verge of a technical breakout at the ₹12.10 per share level," stated Sumeet Bagadia, Executive Director at Choice Broking. Further gains in this telecom company would be indicated by a clear breach over this level. With this promising breakout perspective, one can hold Vodafone Idea shares as the stock may reach the ₹14 and ₹16 levels. Nonetheless, investors are need to keep their stop-loss at ₹10.80 per share.
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