Vodafone Idea Rallies 9% On Fund Raising Plans; What Investors Need To Know

Shares of Vodafone Idea Limited zoomed 9 per cent to Rs 17.60 in the morning trade on February 23, extending gains for the second day after a 6 per cent jump in the previous session.

While the company did not disclose the amount it plans to raise, it could be in one or more tranches through equity instruments, including rights issue, preferential issue of shares, qualified institutional placement of shares.

In the third quarter of the fiscal year 2023-24, the company recorded a net loss of Rs 6,985.9 crore, reflecting a decrease of 12.56 percent compared to Rs 7,990 crore in the corresponding period of the previous year.

However, the revenue for the same quarter amounted to Rs 10,673.1 crore, registering a slight increase of 0.49 percent from Rs 10,621 crore in the third quarter of the preceding fiscal year.

The cash-strapped operator has been struggling for a while to raise capital, which is of utmost significance given the high debt on books. Further, it needs heavy capital investments for network upgradation and rollout of 5G services to compete with rivals Bharti Airtel and Reliance Jio.

As of December end, Vodafone Idea’s gross debt stood at Rs 2.15 lakh crore, comprising deferred spectrum payment obligations of Rs 1.38 lakh crore, AGR liability of Rs 69,020 crore due to the government, dues of Rs 6,050 crore towards banks and financial institutions, and optionally convertible debentures amounting to Rs 1,660 crore.

On Thursday, Aditya Birla Group Chairman Kumar Mangalam Birla said that the group remains committed and is making all efforts to rope in external investors. The stock had rallied following the comments.

“We are making good progress but can’t put in a timeline…We remain very committed to Vodafone Idea and as we have said in the public domain, efforts are on to get outside investors,” Birla said.

Nuvama analysts have issued a “reduce” recommendation for the stock, citing concerns stemming from the company’s Q3FY24 earnings. The report highlights the importance of closely monitoring the capital-raising efforts and the Average Revenue Per User (ARPU) trajectory. Additionally, Nuvama emphasizes the need for the company to prevent falling significantly behind its peers in the rollout of 5G technology.

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