Vodafone Idea stock rises—Here's why | Should you buy, sell or hold VIL shares?

Vodafone Idea news, Vodafone Idea share price today: Vodafone Idea Ltd (VIL) shares were in focus on Friday, June 14, a day after the telecom operator decided to offer a Rs 2,458-crore stake to its key long-term vendors Nokia Solutions and Networks India, and Ericsson India to partially clear certain outstanding dues. VIL shares gained 4.85 per cent to the day's high of Rs 16.85 on NSE in morning deals. VIL shares closed at Rs 16.79, up 4.48 per cent on NSE.

The board of Vodafone Idea has cleared allotment of shares on a preferential basis at about 35 per cent higher price compared to the follow-on offer price of the company and comes with a lock-in of 6 months.

The regulatory filing by the telco said, "This preferential allotment price is higher by ~35% to the FPO price and comes with a lock in of 6 months. Nokia and Ericsson will participate for up to Rs. 1,520 Crore and Rs. 938 Crore respectively, subject to approval by VIL shareholders at the EGM to be held on July 10, 2024." 

"Nokia and Ericsson both have a long-term partnership with VIL, as key suppliers of network equipment, and this preferential allotment will enable VIL to clear part of their outstanding dues," the filing said.

Post this preferential issuance, the shareholding of Nokia and Ericsson in the company will be 1.5 per cent and 0.9 per cent, respectively.

The shareholding of VIL promoters -- Aditya Birla Group and Vodafone -- will stand at 37.3 per cent while the government's shareholding will come down to 23.2 per cent and the balance 37.1 per cent will be public shareholding.

Vodafone Idea share price target: Should you buy, sell or hold VIL shares? Here's what JPMorgan says

JPMorgan has maintained an underweight call on Vodafone Idea with a target of Rs 7 per share. The global brokerage remains underweight on the counter as the equity story is complicated and has highlighted the following key points:  

• Equity swap to address legacy vendor dues
• Further dilution can't be ruled out
• Believe repayments and clearance of past dues of Indus Towers could be delayed further
• Still has a $21 billion debt where there is no clarity on repayment

Vodafone Idea Q4 results

Vodafone Idea reported widening of losses to Rs 7,675 crore in the March quarter amid rise in interest and financing cost. The consolidated revenue of operations remained almost flat about Rs 10,607 crore during the reported quarter.

For the year ended March 31, 2024, Vodafone Idea (VIL) posted widening of loss to Rs 31,238.4 crore from Rs 29,301.1 crore a year ago. Read more