Vodafone Idea Made Robust FPO Debut with 7% Premium, Extending their Gains

Vodafone Idea

Vodafone Idea Limited’s follow-on public offering (FPO) witnessed robust investor demand, being oversubscribed 6.36 times by the final bidding day on April 22. Investors bid for a staggering 8,011.8 crore equity shares, underscoring the market’s confidence in the telecom operator’s future prospects.

The company’s shares commenced trading on April 25, opening at Rs 11.80, a remarkable 7.2 percent premium over the issue price of Rs 11. As of 9:20 am, Vodafone Idea’s shares were trading at Rs 13, up 18 percent from the issue price, despite the counter having slipped 13 percent over the preceding three months.

Securing substantial investment from institutional investors, Vodafone Idea successfully raised Rs 18,000 crore, marking it as the largest follow-on public offer in India’s history. This capital infusion is poised to bolster the company’s competitiveness in the near-duopoly Indian telecom market.

While acknowledging the company’s short-term challenges, Manish Chowdhury, head of research at StoxBox, advised investors with moderate to high risk appetite to view this as a turnaround story, anticipating a few quarters for the company to regain its competitive edge.

Amit Goel, co-founder and chief global strategist at Pace 360, recommended investors to allocate moderate funds for the long term and consider adding to their positions post-listing at lower levels, thereby averaging out their investment with a long-term investment strategy.

The overwhelming investor response to the FPO was evident in the subscription data. Qualified institutional buyers (QIBs) led the charge, subscribing a staggering 17.56 times their allotted portion, while non-institutional investors subscribed 4.13 times their quota. The retail portion was fully subscribed.

Vodafone Idea plans to utilize Rs 12,750 crore of the net issue proceeds to expand its network infrastructure, setting up new 4G and 5G sites, and augmenting the capacity of existing 4G sites, positioning the company for future growth in the rapidly evolving telecom landscape.

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