Vodafone Idea hits 10-month high on heavy volumes; gains 24% in six days

Last week, Care Ratings reaffirmed its rating and revised the outlook assigned to the long term bank facilities and non-convertible debentures of Vodafone Idea from 'Positive' to 'Stable'.

Shares of Vodafone Idea (VIL) hit 10-month high at Rs 9.38, up 4 per cent on the BSE in Tuesday’s intra-day trade backed by heavy volumes in an otherwise range bound market. The stock of telecom service provider was trading at its highest level since September 2022. It had hit a 52-week high of Rs 10.08 on September 13, 2022. The stock has recovered 65 per cent from its 52-week low of Rs 5.7 touched on March 31.

Till 11:47 AM; a combined 233 million equity shares representing 0.5 per cent of total equity of VIL changed hands on the NSE and BSE. In comparison, the S&P BSE Sensex was up 0.10 per cent at 65,059.

The stock price of VIL was quoting higher for the sixth straight trading day, up 24 per cent during this period after Care Ratings reaffirmed its rating and revised the outlook assigned to the long term bank facilities and non-convertible debentures of Vodafone Idea from ‘Positive’ to ‘Stable’.

The outlook for the bank facilities of VIL has been revised from ‘Positive’ to ‘Stable’ due to delay in raising funds from investors and financial institutions against the envisaged timelines resulting in postponement of implementing revival plan. However, the ‘Stable’ outlook is on the expectation of continuous support from the promoter groups and infusion of funds by way of equity and long-term debt funds, which will provide liquidity support to VIL, implement 5G roll out to augment the subscriber base and improve revenue visibility.

The ratings factor in the experienced management team, pan-India telecom presence with high brand recognition supported by a stable outlook for the Indian telecommunications industry, stance of the promoter groups [i.e., the Aditya Birla group (ABG) and the Vodafone group Plc (VGP)] in assisting the entity and majority shareholding (33.14 per cent as on June 30, 2023) of the Government of India through the Department of Investment and Public Asset Management.

Furthermore, the ratings take cognisance of the receipt of commitment from a promoter group entity confirming direct or indirect financial support to the extent of Rs 2,000 crore to address impending obligations of the company arising out of any cash flow mismatch.

Meanwhile, on business outlook, VIL in its FY23 annual report said that the company continues to focus on execution of its stated strategy. The company will remain focused on providing superior data and voice experience and building a differentiated digital experience through its several strategic initiatives as well as continue to make investments for expanding 4G coverage and capacity especially in its 17 priority circles and introduce 5G services once funding is in place.

To further drive the digital agenda, the company will look for  deeper integration opportunities with its partners using its platform capabilities to provide a differentiated telco++ experience, creating value both for its partners as well as customers, VIL said.