Vodafone Idea FPO: Share price, GMP to subscription status. Should you apply?

Vodafone Idea FPO GMP

As per the market observers, Vodafone Idea FPO GMP (grey market premium) today is ₹1.40, which is ₹0.40 higher than the Vodafone Idea FPO GMP at the beginning of its bidding date. Market observers said that the Vodafone Idea FPO GMP has remained positive despite weakness in the secondary market, which is praiseworthy. They said that the Indian stock market has remained under the sell-off stress throughout the week gone by. So, Vodafone Idea FPO GMP quoting at a premium of 13 percent against the upper price band of Vodafone Idea FPO is praiseworthy.

Vodafone Idea FPO subscription status

After two days of bidding, the follow-on issue was subscribed 0.49 times whereas the retail portion of the Vodafone Idea FPO was booked 0.13 times. the NII portion of the Vodafone Idea FPO was subscribed 0.75 times while the QIB segment of the FPO was booked 0.93 times. So, this ₹18,000 crore Vodafone Idea FPO is still more than 500 percent vacant and hence chances of getting Vodafone Idea shares in the share allotment process is quite high. So, it becomes tricky whether one should apply for the issue or not.

Vodafone Idea FPO review: Should you apply?

On whether one should apply for Vodafone Idea FPO or not, Amit Goel, Co-Founder and Chief Global Strategist at Pace 360 said, “Vodafone Idea FPO is the third-largest player in telecommunication services and has shown inconsistency in its performance so far against two mega players, namely Jio and Bharti. It is coming with an FPO worth Rs. 18,000 crore at a price range of ₹10–11 apiece, following a Rights Issue worth Rs. 25,000 crore in April 2019. However, on the financial front, it has been posting losses at the net levels. In the upcoming years, this struggling player may get back on track given the interest of major investors, fund houses, and the assistance of the Indian government. This means that at the given price, this is a purely long-term risky bet. Considering this, well-informed investors may allocate moderate funds for the long term and may add on post-listing at lower levels to average out the investment with a long-term investment strategy.”

Manish Chowdhury, Head of Research at StoxBox said, “We sense that the ₹18,000 crores FPO by Vodafone Idea is a step in the right direction as it would help the company to improve its competitiveness in the near duopoly Indian telecom market. The company’s focus to improve its 4G penetration and launch 5G services in the next few quarters would enhance the ARPU which is lower than Jio and Bharti Airtel. With improved operational performance, we believe that Vodafone Idea would be in a better position to raise funds in the future, both through equity and debt, to service its obligations and growth plan. The recent capital infusion by promoters and the government’s efforts to keep the company as a going concern instills confidence about the turnaround prospects of the company. Hence, we advise investors with moderate to high-risk appetite to subscribe to the FPO from a medium to long-term perspective.”

Giving a ‘subscribe’ tag to Vodafone Idea FPO, Arun Kejriwal, Founder of Kejriwal Research and Investment Services said, “Investors can apply to the Vodafone Idea FPO for these four crucial reasons — 1] Vodafone Idea FPO has come at a handsome 20 percent premium against the current Vodafone Idea share price; 2] Government of India is strongly standing behind the company as they don’t want to give monopoly to two companies in such a big telecom industry in India; 3] The telecom company has not done any CAPEX in the last four too five years. The net proceeds of the Vodafone Idea FPO may enable the company to work on its CAPEX, and 4] The anchor book of the Vodafone Idea FPO signals that some serious kind of investors are coming on board with the Vodafone Idea.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 20 Apr 2024, 11:15 AM IST