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The stock hit a high of Rs 123.75 on BSE in intra-day trade on Monday, immediately after the merger announcements, has now slipped 27% from those levels.
From Rs 77.80 on January 27 after Vodafone reportedly confirmed that it is in merger talks with Idea Cellular, the stock had zoomed 59%.
According to Religare Capital Markets, Idea’s stock price is already factoring in synergy benefits; hence further upsides will hinge on revenue market share (RMS) protection and industry recovery.
“While the merger is clearly a positive outcome for Idea as it gives the company scale and access to capital, we believe that defending market share will be a challenge,” the brokerage firm said in client note. The transaction will take nearly two years to be completed and the annual $2 billion run-rate synergy estimated by both players will be achieved only at the end of Year 4, it added. CLICK HERE TO READ WHAT BROKERAGES SAY ABOUT THE DEAL
At 11:37 am; the stock was trading 7% lower at Rs 90.95 on BSE as compared to 0.24% decline in the Sensex. A combined 50.26 million shares changed hands on the counter on BSE and NSE.