Shares of telecom operator Vodafone Idea Ltd witnessed a sharp rally on Friday, December 19, climbing 6% to close at ₹12 per share. This marked the second consecutive session of gains, fueled by the company's successful fundraising of ₹3,300 crore through secured non-convertible debentures (NCDs).
A Crucial Fundraise for Growth and Capex
The capital was raised through Vodafone Idea Telecom Infrastructure Ltd (VITIL), a subsidiary of the telecom major. In a regulatory filing on Wednesday, the company revealed that the issue saw strong demand, with interest from large non-banking financial companies (NBFCs), foreign portfolio investors (FPIs), and alternative investment funds (AIFs) exceeding the issuance size.
This infusion of funds is expected to bolster Vodafone Idea's capital expenditure programme and support its business growth plans. For the current financial year, the company has earmarked a capex budget of ₹7,500 crore to ₹8,000 crore. It has already spent ₹4,200 crore in the first half to enhance its 4G coverage and initiate the rollout of 5G services.
Fundraise Follows Supreme Court Breather on Dues
The fundraising comes just eight weeks after the financially stressed telco received a significant relief from the Supreme Court. Vodafone Idea has been grappling with massive pending dues to the central government, which had mounted to approximately ₹2 trillion, threatening its survival.
Of this colossal amount, the company's Adjusted Gross Revenue (AGR) liabilities alone stood at ₹78,500 crore as of September-end. The remainder largely consists of payments for wireless spectrum purchased in past auctions. Following a late-October Supreme Court order, the government is now reviewing these dues, with analysts emphasizing that the company's future hinges on the extent of waivers it may ultimately receive.
Stock Stages a Remarkable Turnaround
Vodafone Idea's stock has undergone a dramatic reversal in recent months. After hitting a two-year low in August, the shares have staged a powerful recovery, surging nearly 96% since then. The rally has been driven by multiple positive triggers, including better-than-expected September-quarter results, reports of potential tariff hikes in 2025, and the Supreme Court's nod for the government to consider full relief on dues.
The stock is now trading comfortably above its Follow-on Public Offer (FPO) price of ₹11, a level it reclaimed in mid-November after a gap of over a year. This performance has positioned it as a potential top performer on Dalal Street for 2025.
Technical analysts are bullish on the stock's prospects. Sumeet Bagadia, Executive Director at Choice Broking, noted that the Vodafone Idea share price is on the verge of a technical breakout at the ₹12.10 level. "A decisive breakout above this level would signal further upside in this telecom stock," he said. Bagadia suggests investors can hold the shares with a target of ₹14 and ₹16, while maintaining a strict stop-loss at ₹10.80 per share.
Disclaimer: This story is for informational purposes only. The views and recommendations are those of individual analysts and not of the publication. Investors are advised to consult certified experts before making any investment decisions.
