Updated April 25th, 2024 at 15:39 IST

Vodafone Idea stock surges 27% above FPO price as new shares debut on exchanges

Kumar Mangalam Birla said on Thursday that the Rs 18,000-crore fundraise by Vodafone Idea is a "fresh lease of life" for the company.

Reported by: Business Desk
Vodafone Idea | Image:X Photo
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Vodafone Idea share price: Shares of Vodafone Idea Ltd witnessed a surge, reaching a staggering 25 per cent above the Fixed Price Offering (FPO) allotment price during morning trading on April 25. The stock soared to an intraday high of Rs 13.98 on the Bombay Stock Exchange, marking a significant uptick from the FPO price of Rs 11 per share, following the listing of FPO shares on the bourses today.

Aditya Birla Group Chairman Kumar Mangalam Birla said on Thursday that the Rs 18,000-crore fundraise by Vodafone Idea is a "fresh lease of life" for the company.

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The company, which has been struggling to hold on to subscribers amid very heavy competition in the sector, will focus on increasing its network and selectively introducing 5G services, Birla told reporters at the listing ceremony of the follow-on public offer.

When asked if most of the problems for the company will get sorted with the capital raise, Birla answered in the affirmative. "And this is like a sort of fresh lease of life for the company," he said.

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Despite facing challenges, the Aditya Birla Group company has made headlines with its successful FPO, raising a substantial Rs 18,000 crore – marking India's largest FPO to date.

“While Vodafone Idea's FPO listing around Rs 12 is a modest increase from the issue price, it reflects initial selling pressure for short-term gains. However, a drop below Rs 11 seems unlikely given the company's turnaround potential. Positive signs and potential post-election tariff hikes could trigger fresh buying after this initial volatility. Aggressive investors with a long-term view might consider holding onto the stock, aiming for a potential rise towards Rs 18 in the future,” said Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

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Investor enthusiasm was evident in the robust subscription numbers seen during the FPO bidding process. The company's FPO garnered a subscription rate of 6.36 times on the final day of bidding, with investors vying for 8,011.8 crore equity shares, as per subscription data from exchanges. Qualified Institutional Buyers (QIBs) led the charge, subscribing 17.56 times the portion reserved for them. Non-institutional investors also showed strong interest, purchasing 4.13 times their allotted quota of shares, while the retail portion was fully subscribed.

Vodafone Idea has outlined ambitious plans for the utilisation of the net issue proceeds from the FPO. A significant portion, amounting to Rs 12,750 crore, will be allocated towards expanding the network infrastructure. This includes setting up new 4G and 5G sites, as well as bolstering the capacity of existing 4G sites.

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Published April 25th, 2024 at 15:37 IST