Shares of Vodafone Idea (Vi) slipped nearly 5% in early deals on Friday even after its board approved a proposal to raise funds up to ₹14,500 crore through various means, subject to shareholders’ approval. The cash-strapped telecom operator plans to raise ₹4,500 crore via issuing of shares to promoters on a preferential basis.
Brokerage firm Nomura has retained its 'reduce' call on the Mumbai-based telco's stock, citing that promoter fund infusion at premium is positive but not enough for the revival of the company. The research firm has given a target price of ₹8 per share, suggesting a potential 28% downside from Thursday’s closing levels.
Vodafone Idea shares opened 5.6% higher at ₹11.7 against the previous close price of ₹11.08 on the Bombay Stock Exchange (BSE). The stock, however, slipped into negative terrain to hit a low of ₹10.57, down 4.6%. The market capitalisation of the telco dipped to ₹30,603.19 crore.
Vi shares have fallen after four consecutive sessions of gain and have risen more than 4% over the past one week. It has dropped 30% since the beginning of the calendar year 2022 and 5% in the last one month. The stock hit a 52-week high of ₹16.79 on December 10, 2021, and 52-week low of ₹4.55 on August 5, 2021.
In an exchange filing on Thursday, Vodafone Idea said that its board approved raising funds up to ₹14,500 crore through various means. The capital raise includes ₹4,500 crore by issuing preferential shares to promoters and up to ₹10,000 crore via private placement, qualified institutions placement or through any other permissible mode in one or more tranches.
"The board of directors of Vodafone Idea in its meeting held on March 3 has approved the issuance of up to 3,38,34,58,645 equity shares of face value ₹10 each at an issue price of ₹13.30 per equity share (including a premium of ₹3.30 per share), which is at a 10% premium to the floor price of ₹12.08 for an aggregate consideration of up to ₹4,500 crore, to Euro Pacific Securities Ltd and Prime Metals Ltd (Vodafone Group entities and promoters), and Oriana Investments Pte Ltd (Aditya Birla Group entity forming part of the promoter group) on a preferential basis," the company said in its release on March 3.
“The board also approved issue of equity shares or securities convertible into equity shares, Global Depository Receipts, American Depository Receipts foreign currency convertible bonds, convertible debentures, warrants, composite issue of non-convertible debentures and warrants entitling the warrant holder(s) to apply for equity shares or a combination thereof up to an aggregate amount of ₹10,000 crore by way of private placement, qualified institutions placement or through any other permissible mode in one or more tranches,” it added.
The board also approved the convening of an extraordinary general meeting of the company on March 26 to approve the fundraise plan.
Promoters of Vodafone Idea — British telecom giant Vodafone Group Plc and Aditya Birla Group — are actively looking to raise fund to revive their financially troubled Indian telecom entity. Last week, Vodafone Group raised around ₹1,442 crore by offloading 2.4% stake in Indus Towers. The company plans to sell another 4.7% shares in the tower unit to Bharti Airtel. The capital infusion from the promoters will boost investor confidence and enhance the market value of the company.
In a separate development, the board also approved the appointed of K.K. Maheshwari, a nominee of Aditya Birla Group, as an additional director (non-executive and non independent) with effect from March 3, 2022. Maheshwari, 67, is a qualified chartered accountant and is currently the vice chairman and non-executive director of UltraTech Cement Ltd.
Meanwhile, D. Bhattacharya has resigned from the board of the company with effect from March 2, citing personal reasons, the company said.
