Vodafone Idea shares jump over 7% on likelihood of equity infusion by promoters

Vodafone Idea (Vi) shares jumped over 7% on the NSE in Wednesday's trade on a likely infusion of Rs 14,000 crore equity as part of the business revival plan. The move is expected to see existing promoters Aditya Birla Group (ABG) and UK's Vodafone Group Plc infuse half the overall amount, a report by the Economic Times said.

The news generated strong buying action in the Vodafone Idea stock, with trading volume reaching to nearly 13.60 crore shares on the NSE around 9:30 am.

The company is proposing to invest a total equity of Rs 14,000 crore in the near term as part of its business revival plan, Economic Times reported citing people with knowledge of the ongoing discussions.

According to the plan submitted to the government earlier this month, ABG and Vodafone Group will soon invest Rs 2,000 crore as fresh equity in the company. The promoters have already invested Rs 5,000 crore as fresh equity since the government's telecom revival package in September 2021, the report said.

As part of the revival plan, the promoters will work with the company to raise another Rs 7,000 crore either as direct equity or through convertible structures from external investors, the report said, further quoting the people cited above.

In March, Vi shares fell to Rs 5.70 which was its lowest level in 52 weeks. The 52-week high is Rs 10.10 on the NSE which it hit in September 2022. This is the third straight day of gain for the Vodafone Idea stock.

Vodafone Idea reported a consolidated net loss of Rs 6,419 crore for the January-March quarter versus a loss of Rs 6,563 crore in the year-ago period and Rs 7,988 crore in Q3FY23. The revenue growth remained muted for the telecom operator at Rs 10,532 crore. It was up 3% year-on-year (YoY).

Following its earnings, brokerages CLSA and Yes Securities recommended a 'sell' on the stock. Meanwhile, Motilal Oswal has a 'Neutral' stance and Nuvama a 'Reduce' rating on the counter.

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