Home News Today marks the opening of the Vodafone Idea FPO. Wondering if you should bid? Here’s the insight from GMP and experts on the ₹18,000-crore matter.

Today marks the opening of the Vodafone Idea FPO. Wondering if you should bid? Here’s the insight from GMP and experts on the ₹18,000-crore matter.

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Vodafone Idea FPO subscription

Vodafone Idea FPO subscription, with a price band of ₹10 to ₹11 per share, opens today and ends on April 22. Experts anticipate a favorable reaction owing to the company’s telecom industry growth prospects.

Vodafone Idea FPO subscription opens today, April 18, closing on April 22. The price band is ₹10 to ₹11 per share. Minimum bid is 1,298 shares, with multiples of 1,298 allowed. Market experts express optimism about the FPO.

The total size of the Vodafone Idea FPO offer includes a fresh issuance of equity shares totaling ₹18,000 crore.

Per the red herring prospectus (RHP), proceeds from the new issue will finance: (i) network infrastructure expansion, including new 4G and 5G sites, at ₹12,750 crore; (ii) deferred spectrum payments to the DoT and GST at ₹2,175 crore; and (iii) general corporate purposes with the remaining amount.

As per BSE data, the government holds a 32.19% stake in Vodafone Idea, according to the shareholding pattern for the quarter ending in March (Q4FY24).

According to news reports from 2022, Vodafone Idea converted its outstanding government debt into a 36% stake, making the Indian government its primary shareholder.

Image: Hindustan Times

During Tuesday’s session, Vodafone Idea’s stock price closed 1.82% down at ₹12.92 per share on BSE.

The grey market premium (GMP) for Vodafone Idea FPO stands at ₹1.50. As per investorgain.com, the anticipated listing price for VI FPO is ₹12.5, representing a potential gain of approximately 13.64%.

Let’s explore expert opinions on the FPO, investor subscription recommendations, and anticipated subscription levels.

Mohit Gulati serves as the CIO & Managing Partner at ITI Growth Opportunities Fund.

Since 2016, I’ve championed the motto: “Roti, Kapda, Maakan, aur Data.” This commitment led me to invest in all of India’s listed telecom giants—RIL, Bharti, and VI (since ₹4!). My rationale for VI is straightforward—it boasts an established network with enduring customer loyalty, despite its challenges. VI’s perceived premium status, compared to more mass-oriented players like Jio, retains high ARPU postpaid subscribers, despite lacking 5G.

From the government’s standpoint, avoiding a telecom duopoly is crucial. Additionally, pushing out an incumbent British Telco due to hefty spectrum fees and taxes doesn’t align with Delhi’s global aspirations or business-friendly image.

I anticipate a strong response to this FPO. With upcoming 5G services and likely post-election tariff hikes across all Indian telcos, I’m confident VI will regain its former strength. Overall, I highly recommend subscribing!” stated Gulati.

Arun Kejriwal, founder of Kejriwal Research and Investment Services

Kejriwal asserts that there’s widespread anticipation that this stock will emulate Yes Bank’s trajectory, drawing considerable interest post-issue. Investors stand to gain significantly, given the robust demand and substantial premium in the grey market. Applying for it is warranted, considering the current profit margin of 15-20%, though its future trajectory remains uncertain.

“Nevertheless, the government’s aim is evident—they aim to prevent the company’s failure and maintain sector diversity. Hence, they’ll support it. The fund raise will facilitate overdue capital expenditures,” Arun stated.

You might also be interested in: Vodafone Idea board will discuss raising ₹20,000 crore in April 6 meeting

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