Vodafone Idea soars 15% on heavy volumes in sharpest intra-day gain of 2022

The debt-ridden telecom operator expects the government to complete conversion of around Rs 16,100 crore dues into 33 per cent stake in the company in the coming weeks, reported news agency PTI.

Shares of Vodafone Idea (Vi) moved 15 per cent higher to Rs 9.57 on the BSE in Monday’s intra-day trade on the back of heavy volumes. With this, the stock of the telecom services operator recorded its sharpest intra-day rally during calendar year 2022.
On December, 31, 2021, Vi had gained 13 per cent in intra-day trade on the BSE.

At 01:45 pm; the stock was trading 14 per cent higher at Rs 9.50, as compared to a 0.54 per cent rise in the S&P BSE Sensex. In the past two trading days, Vi surged 17 per cent. A combined 256 million equity shares have changed hands on the NSE and BSE.

For January-March quarter (Q4FY22), Vi's losses narrowed 6.5 per cent to Rs 6,563 crore on a year-on-year (YoY) basis on the back of revenue growth. Earnings before interest depreciation tax and amortization (ebitda) grew 5.4 per cent YoY to Rs 4,649 crore.

On a quarter on quarter (QoQ) ebitda increased sharply by 21.8 per cent, owing to a sharp 20.5 per cent sequential decline in network and operating costs partly benefitting from lower energy costs, lower number of days and due to one of benefits of Rs 150 crore. Adjusted margins were up 466 bps QoQ to 43.9 per cent.

The company's average revenue per user (ARPU) improved to Rs 124, up 7.5 per cent QoQ vs Rs 115 in Q3FY22, aided by tariff hikes in November 2021. Though, the company lost 3.4 million subscribers sequentially and its user base stood at 243.8 million. But, it added one million 4G customers and that count stood at 118.1 million.

Meanwhile, the debt-ridden telecom operator expects the government to complete conversion of around Rs 16,100 crore dues into 33 per cent stake in the company in the coming weeks, news agency PTI reported last week quoting a top official of the firm.

Vi CEO Ravinder Takkar believes the government's reform package and related developments, return of the bulk of bank guarantees and industry wide tariff hikes and recent fund infusion by the promoters are significant catalysts for the company. CLICK HERE FOR FULL REPORT

As part of the reforms package, the Department of Telecom (DoT) has returned bank guarantees of about Rs 16,000 crore to the company. On March 31, 2022, the company allocated equity shares worth Rs 4,500 crore to the promoters -- Vodafone Group and Aditya Birla Group -- against their investment of Rs 3,375 crore and Rs 1,125 crore, respectively in the company. The board of the company has additionally approved raising of Rs 10,000 crore to support the firm's business.

Vi remains the weakest private telco. The need for capitalisation is urgent mainly due to its upcoming debt repayment requirement, lagging spends on network and continued relative market share loss, according to analyst at ICICI Securites.

“We highlight that recent government relief measures would ensure survival of Vi but the future growth outlook remains uncertain. We have our ratings/target price UNDER REVIEW till clarity emerges on fund raising,” the brokerage said in its result update.