The shares of this midcap stock, primarily engaged in the business of Mobility and Long Distance services, trading of handsets and data cards hit a 10 percent upper circuit on Tuesday after the Government decided to convert Rs 36,950 crore debt to equity.
Stock Performance
With a market capitalization of Rs 53,473.38 crore, Vodafone Idea Ltd was locked in a 10 percent upper circuit at Rs 7.49 per share in Tuesday’s trading session as compared to its previous closing price of Rs 6.81 per share.
What Happened
Vodafone Idea informed in an exchange filing that the Ministry of Communications has decided to convert the outstanding spectrum auction dues into equity shares, which is to be issued in the name of the Government of India.
In line with this, the company will issue 3,695 crore equity shares at a face value of Rs 10 each, valued at Rs 36,950 crore, within a period of 30 days after issuance of necessary order from relevant authorities.
The Government’s stake in the telecom company would now increase to 48.99 percent from 22.6 percent. The promoters will continue to have operational control of the company.
Brokerage View
Citi maintains a “Buy” call on Vodafone Idea with a view that the government’s initiative to raise its stake in the debt-laden company is a key balance sheet boost. The company’s major struggles remain raising fresh capital and expansion of 4G and 5G networks. The brokerage firm has given a target price of Rs 12 per share, indicating a 60 percent upside potential from the stock’s current price of Rs 7.49.
Company Overview
Headquartered in Mumbai, Vodafone Idea is primarily engaged in the business of Mobility and Long Distance services, trading of handsets and data cards. The company offers digital services, enterprise services, and IoT solutions to the public sector, SMEs and start-ups.
Financial Performance
The company’s revenue stands at Rs 11,117 crore in Q3 FY25, up by 4 percent from Rs 10,673 crore in Q3 FY24. The company reported a net loss of Rs 6,609 crore from Rs 6,986 crore during the same period.
Written by Shwetha Sairam
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
