Vodafone Idea FPO shares list at 9% premium over issue price

Shares allotted in the follow-on public offer (FPO) of Vodafone Idea made a decent debut on the stock exchanges on Thursday, listing at ₹12 per share on the BSE, a premium of 9% over the issue price of ₹11. On the NSE, Vodafone Idea(Vi) FPO shares debuted at ₹11.80 per share, up 7.27% from the issue price. Today, over 1,636 crore new equity shares allotted to investors under the FPO were listed on the exchanges. With this, the total equity base of Vi increased to 6,648 core from 5,012 crore ahead of the listing of FPO securities.

The listing was broadly in line with Street expectations as the stock was commanding a grey market premium (GMP) of ₹1.40 over the issue price in the unofficial market, indicating listing price to be around ₹12.4 per share.

“While Vodafone Idea's FPO listing around ₹12 is a modest increase from the issue price, it reflects initial selling pressure for short-term gains. However, a drop below ₹11 seems unlikely given the company's turnaround potential,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

“Positive signs and potential post-election tariff hikes could trigger fresh buying after this initial volatility. Aggressive investors with a long-term view might consider holding onto the stock, aiming for a potential rise towards ₹18 in the future,” she adds.

In the FPO, the company allocated more than 1,636 crore equity shares to the investors at ₹11 apiece, raising ₹18,000 crore, the largest so far by an Indian company, which was subscribed 6.5 times. The issue, which breached the record FPO of ₹15,000 crore by YES Bank in 2020, garnered a strong response from qualified institutional buyers (QIBs) and non institutional investors (NIIs) as the quota reserved for them were booked 17.56 times and 4.13 times, respectively. The portion set aside for retail investors was subscribed 0.92 times.

Ahead of the opening of the FPO, the company raised ₹5,400 crore through anchor book, which saw participation from some marquee investors such as GQG Partners, The Master Trust Bank of Japan, UBS, and Morgan Stanley Investment Management, among others.

The company intends to use the FPO proceeds to boost its capex and expand 4G coverage, 5G network rollout and capacity expansion. Additionally, it aims to pay certain deferred payments for spectrum to the DoT and the GST with additional funds and also use them for general corporate purposes.

Meanwhile, regular equity shares of Vodafone Idea opened lower at ₹12 against the previous closing price of ₹13.09 on the BSE. However, the stock staged a smart recovery and rebounded 16% from opening low to touch a day's high of ₹13.93. The market capitalisation crossed ₹92,000 crore, with nearly 165 lakh stocks changing hands over the counter as compared to two-week average volume of 20.36 lakh shares. 

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