Voda Idea to discuss fundraising on Feb 27, mulls rights issue, QIP, FPO, other means; stock up 6%

Vodafone Idea will consider fundraising at a board meeting on February 27, the Aditya Birla Group telecom company said in an exchange notification.

The company said that the board will "consider and evaluate any and all proposals for raising of funds in one or more tranches by way of a rights issue, further public offer, private placement including preferential allotment, qualified institutions placement or through any other permissible mode and/or combination thereof as may be considered appropriate, by way of issue of equity shares or by way of issue of any instruments or securities including securities convertible into equity shares, Global Depository Receipts, American Depository Receipts or bonds including foreign currency convertible bonds, convertible debentures, warrants, and/or non-convertible debentures including non-convertible debentures along with warrants, which may or may not be listed.”

Shares of Vodafone Idea closed 6 percent higher on November 22 after Aditya Birla Group Chairman Kumar Mangalam Birla on Thursday said that the group was committed to the cash-strapped Vodafone Idea, and was looking at roping in external investors.

In Q3FY24, the company reported a net loss of Rs 6,985.9 crore, down by 12.56 percent from Rs 7,990 crore in the year-ago period. Revenue for the same period was Rs 10,673.1 crore, up 0.49 percent from Rs 10,621 crore in the third quarter of the previous fiscal. EBITDA (earnings before interest, taxes, depreciation, and amortisation) of the company grew 140 bps to 40.8 percent in the quarter compared to 39.4 percent in the previous fiscal.

Nuvama analysts have given the stock a reduce call on the basis of its Q3FY24 earnings. According to the report, Nuvama says that they remain watchful of the capital-raise and ARPU trajectory and add that VI also needs to ensure it does not fall too far behind its peers in the 5G rollout. “Vodafone Idea has a Rs 54 billion of debt repayment coming up in FY2025.  Needless to say, fund-raising remains the most crucial requirement for the company as it remains saddled with high debt and repayment obligations.,” the report said.

Nuvama has set a target price of Rs 7 for the stock.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.