Vodafone Idea share price surges over 100% in September – check what drove this stock

The cash-strapped Vodafone Idea share price has jumped around 40 per cent in the last two days after the government announced some relief to the telecom sector. The stock on Friday gained 10 per cent to hit a day’s high level of Rs 12.37 per share on the BSE intraday early morning on Friday. 

The third-largest telecom company stock has witnessed a profit booking and was down by 4.5 per cent to Rs 10.75 per share at around 12:09 pm as compared to 0.04 per cent rise in the S&P BSE Sensex. Alone in September, the scrip has surged over 103 per cent amid the government’s relief measures.

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The government on Wednesday has given a breather to the telecom sector – mainly to Bharti Airtel and Vodafone Idea as it rationalised the Adjusted Gross Revenue (AGR) definition to exclude non-telecom revenues and approved a 4-year moratorium on dues. 

In the early morning trade, the counter has seen huge trading volumes, with a combined 554 million equity shares having changed hands on the NSE and BSE in the first half an hour of trading. 

Even the brokerages have raised hope for the Vodafone Idea stating that the Indian telecom sector is to remain three-player market. In this regard, JP Morgan mentions moratorium ensures Vodafone Idea's survival, as AGR a moratorium will help it to overcome payouts of Rs 17,000 crore in 2022. 

While CITI says onus now shifts to Vodafone Idea to complete its capital raise and start reinvesting in the network, adding further, it’s a much-needed breathing room provides a material opportunity Vi. 

Similarly, UBS says, Vodafone Idea now can increase capex to Rs 10,000-12,000 crore, which is essential to stop market share loss and improves Vi's ability to refinance upcoming debt repayments.

Vodafone Idea's debt has more than tripled in the last four years to Rs 1.6 lakh crore as of the end of March 2021, from around Rs 37,000 crore in FY16, which includes deferred spectrum obligations and adjusted gross revenue (AGR) liabilities.