Vodafone Idea share zooms 23%, hits 52-week high; here’s why

Telecom services provider Vodafone Idea (Vi) saw a 23% rise in its share price today amid speculations of funding-related talks coming to a close soon. The scrip opened gap up at ₹13.41 and surged to a one-year high of ₹16.22, up 23%, taking the company's m-cap to ₹78,033 crore. At the time of filing, heavy trading could be seen on the counter as 29.8 crore shares were changing hands on the BSE against a two-week average of 5.2 crore.

The Vi share is currently trading 64.8% up from the 52-week low of ₹5.7 touched on March 31, 2023. Vi share has seen 100% rise in year-to-date period, while the scrip grew 114.77% in the six months. In the past month alone, the share has given 22.61% return.

The spurt in share price comes about two months after Vodafone Idea chief executive Akshaya Moondra during the company's earning call said: "Discussions are progressing and we've again made progress since our last earnings call. I would expect that we should be able to conclude these discussions, which are related to the equity investors in this quarter, which is also what I had indicated in the last quarter. With the banks, the discussions have happened earlier and currently, the focus is on tying up the equity investment basis which the banks will process the request for bank funding and process their internal approval."

Another positive development that could have also fuelled support for the stock could be the recent Bombay High Court judgement that came in its favour. The HC on November 9 this year directed the income tax department to refund ₹1,128 crore to the telco. The court instructed the tax department to issue the refund in 30 days along with applicable interest.

ICICI Securities in its November report kept Vodafone Idea's estimates, target price and recommendation "Under Review", saying the company has been facing capital constraints, but is in a much better position than telcos that went defunct in the not-so-distant past in the country.

"VIL has bought enough 5G spectrum and requires capital only for rolling out the network. Thus aggressive deployment of 5G is dependent on the company’s ability to raise more capital, while peers are gearing up for faster 5G deployment," the report says.

In the second quarter of the fiscal year, 2023-23 (September-October), Vi's underlying mobile revenue grew 0.5% QoQ despite a 6 million decline in subs.

Its net debt stood at ₹2.12 lakh crore billion. The debt from banks and financial institutions has been reduced by ₹7,220 crore during the last year (was at ₹15,080 crore in Q2FY23).

EBITDA for the quarter grew by 3.0% from ₹4,160 crore in Q1FY24 to ₹4,280 crore and EBITDA margins were at 40%.

The company’s average revenue per user (ARPU) for the quarter stood at ₹142 vs ₹139 in Q1FY24 (QoQ growth of 2.1%). Its 4G subscriber base increased to 12.4 crore vs 12.2 crore in Q1FY24.

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