The Vodafone Idea FPO will close on Monday, April 22. It began for subscriptions yesterday, Thursday, April 18. On the first day of the share offering, 26% of the Vodafone Idea FPO subscription status was made up of non-institutional investors and qualified institutional buyers (QIBs).
According to BSE statistics, retail investors only bid for 6% of the shares reserved for them, while the QIB quota received 61% subscriptions by the end of the day and the non-institutional investor category received 28%.
Arun Kejriwal, the founder of Kejriwal Research and Investment Services, emphasized the importance of qualified institutional buyers (QIBs) subscribing early, ideally on the second day of the offering. With this Saturday being a working day for banks, applications submitted on Saturday may not be processed until Monday, potentially leading to a surge in retail applications on the third day. Analyzing the retail applications, if we divide them by the total amount received, it suggests significant interest from larger retail investors, those applying just under the 2 lakh threshold, rather than solely from the highly wealthy HNI category.
“Due to the geopolitical circumstances, they may have an impact today in the morning. The Nifty 50 has fallen substantially, and it is unclear how markets, especially Vodafone Idea shares, would react. You will see respectable numbers coming in even today. If the QIB is subscribed today, it provides a good signal; QIBs are never subscribed on the second day. With a ₹18,000 crore issuance, Kejriwal believes that if QIBs are subscribed on day two, the optics are promising.
At 09:34 IST on Friday, Vodafone Idea’s share price was trading 1.21% lower at ₹13.04 on BSE.
Vodafone Idea FPO details
The Vodafone Idea FPO’s total offer size is made up of up to ₹18,000 crore worth of newly issued equity shares. The Vodafone Idea FPO price range is set at between Rs 10 and ₹11 per unit. With a minimum bid limit of 1,298 equity shares, bids may be placed in multiples of 1,298 equity shares.
According to the red herring prospectus (RHP), the country’s third-largest telecom operator intends to use the net proceeds of the new issuance to finance the following: The company plans to spend ₹12,750 crore on equipment to expand its network infrastructure. This includes establishing new 4G sites, increasing capacity at both existing and new 4G sites, and establishing new 5G sites. Additionally, the company plans to pay the DoT ₹2,175 crore for certain deferred payments for spectrum and the GST thereon. The leftover money will be applied to company operations in general.
With the help of anchor investors such as Australian Super, GQG Partners, Fidelity Investments, UBS Fund Management, and Jupiter Fund Management, Vodafone Idea was able to collect around ₹5,400 crore through its first public offering.
Vodafone Idea FPO Review
According to the brokerage, the major goal of this transaction is to strengthen Vodafone Idea’s network infrastructure. To better compete with Jio and Airtel, the two market leaders, additional 4G and 5G towers will be installed, which are critical for enhancing network coverage and capacity. Furthermore, a portion of the earnings will be utilized to pay down debt, potentially strengthening Vodafone Idea’s finances.
Nonetheless, potential investors confront challenges due to Vodafone Idea’s financial situation. In contrast to its competitors, Vodafone Idea has constantly seen a drop in customer numbers. Furthermore, a financial crisis may occur in 2026 as a result of substantial spectrum and AGR (Adjusted Gross Revenue) liabilities of up to $4 billion.
“Even with the alluring 15-17% discount offered by the FPO, VI does not appear to have a clear path to recovery shortly.” As a result, before participating in the FPO, investors should carefully consider these concerns, particularly VI’s financial position and potential liabilities,” cautioned the brokerage.
Geojit Financial Services LTD
According to the brokerage, the Indian government, which owns 32% of Vodafone Idea, will eventually purchase a 24% stake via a reverse stock offering (FPO). The issue is available at an upper price range of ₹11, representing a 14.7% decrease from the previous closing price of Rs.12.9 (16 April 2024).
Vodafone Idea presents a high-risk proposition in the short to medium term, given the near-term expectations of continuous losses and customer attrition due to a lack of 4G service expansion in comparison to its peers. Long-term prospects will be determined by debt restructuring and the expansion of 4G and 5G services. We strongly recommend that investors who are considered high risk due to strong parental support subscribe.
Vodafone Idea GMP Today
Vodafone Idea FPO GMP or grey market premium costs ₹1.20. According to investorgain.com, the new shares issued under the FPO are expected to be listed at ₹12.2, marking a 10.91% increase over the price band’s upper limit.
The FPO GMP trend has not changed significantly and is consistent with grey market activity over the preceding seven sessions. This pattern is predicted to continue till the last day. Grey market premium shows that investors are willing to pay more than the issue price.
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The existence of a grey market premium indicates that investors are prepared to pay a premium over the issue price.
Disclaimer: Stockeasynow provides stock market news for informational purposes only and should not be construed as investment advice. Readers are strongly encouraged to consult with a qualified financial advisor before making any investment decisions.
