Vodafone Idea Shares Surge 8% Amid Cabinet Proposal Speculations: Analysts Share Insights

Vodafone Idea Ltd (VIL) shares saw a sharp rise on Tuesday, gaining 18.63% intraday to touch a high of Rs 8.28 before settling at Rs 7.53, up 7.88%. The trading volume on the BSE was significantly higher, with 18.72 crore shares exchanged, far surpassing the two-week average of 4.97 crore shares. The stock recorded a turnover of Rs 147.92 crore, achieving a market capitalization of Rs 52,483.96 crore.

Cabinet Proposal Triggers Rally

The surge followed reports that the Union Cabinet approved a proposal to waive bank guarantees (BG) required for telecom operators purchasing spectrum until 2022. Both BSE and NSE sought clarification from Vodafone Idea regarding this news.

In its response, Vodafone Idea stated:
“As and when a decision is communicated by the DoT (Department of Telecommunications) or through a press release by the government of India, the company will make the necessary disclosures as required.”

Financial Performance in Q2 FY25

Vodafone Idea posted a reduced year-on-year (YoY) consolidated net loss for the September 2024 quarter at Rs 7,175.9 crore, compared to Rs 8,737.9 crore in the same period last year. However, the loss widened quarter-on-quarter (QoQ) from Rs 6,432.1 crore in the previous quarter.

• Revenue: Up 2.02% YoY to Rs 10,932.2 crore.
• Total Subscribers: 20.5 crore, of which 12.59 crore were 4G users.
• ARPU (Average Revenue Per User): Rs 166, a key metric in the telecom sector.

Analysts’ Take

Dharmesh Kant, Head of Equity Research, Cholamandalam Securities:

• “Many factors regarding VIL depend on government decisions and judgments, but the company is likely to endure. With a 30%+ government equity stake, the stock has long-term multibagger potential. Investors with a horizon of 2-3 years may benefit.”

Jigar S Patel, Senior Manager – Technical Research, Anand Rathi:

• Immediate resistance: Rs 8.5-9.5 range.
• Support: Rs 7.15.
• “A decisive breakout above Rs 8.5 could lead to further upside toward Rs 11. The short-term trading range is expected between Rs 6.5 and Rs 11.”

Osho Krishan, Senior Research Analyst – Angel One:

• “Avoid trades for now and stay on the sidelines unless the stock rebounds significantly above the Rs 9-9.50 range.”

Company Updates

• VIL raised Rs 18,000 crore through a follow-on public offering (FPO).
• The company is rolling out 5G services in select areas.
• VIL was formed in 2018 through the merger of Vodafone Group’s India business with Idea Cellular.

Conclusion

Vodafone Idea’s recent stock performance reflects optimism fueled by government decisions, but the telecom giant’s long-term outlook remains dependent on strategic execution, including its 5G rollout, financial restructuring, and ARPU growth. Investors are advised to approach cautiously, with a focus on key technical levels and regulatory developments.