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Business News/ Markets / Ipo/  Vodafone Idea FPO opens today. Should you bid? Here's what GMP, experts say about the 18,000-crore issue
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Vodafone Idea FPO opens today. Should you bid? Here's what GMP, experts say about the ₹18,000-crore issue

Vodafone Idea FPO subscription opens today and closes on April 22 with a price band of ₹10 to ₹11 per share. Experts predict a positive response due to the company's potential growth in the telecom industry.

Vodafone Idea FPO date of subscription is scheduled for tomorrow (Thursday, April 18) and will close on Monday, April 22. Premium
Vodafone Idea FPO date of subscription is scheduled for tomorrow (Thursday, April 18) and will close on Monday, April 22.

Vodafone Idea FPO date of subscription is scheduled to open today (Thursday, April 18) and will close on Monday, April 22. Vodafone Idea FPO price band has been set in the range of 10 to 11 apiece. There is a minimum bid limit of 1,298 equity shares, and beyond that, bids may be placed in multiples of 1,298 equity shares. All market experts appear bullish about the FPO issue. 

The Vodafone Idea FPO total offer size comprises of fresh issue of equity shares aggregating up to 18,000 crore.

According to the red herring prospectus (RHP), the net proceeds from the new issue will be used by the company to finance the following: (i) acquisition of equipment for the expansion of its network infrastructure, amounting to 12,750 crore; this includes (a) the establishment of new 4G sites; (b) the augmentation of capacity at both existing and new 4G sites; and (c) the establishment of new 5G sites; (ii) payment of certain deferred payments for spectrum to the DoT and the GST thereon, amounting to 2,175 crore; and (v) the remaining amount for general corporate purposes.

Also Read: Vodafone Idea FPO: 10 key things to know about 18,000-crore issue as anchor book opens today

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Government stake in Vodafone idea is 32.19% based on the shareholding pattern for the quarter that ended in March (Q4FY24), as per BSE data.

As per news reports, in 2022, Vodafone Idea transformed its unpaid debt to the government into a 36% stake, making the Indian government the company's largest stakeholder.

On Tuesday's session, Vodafone Idea share price ended 1.82% lower at 12.92 apiece on BSE. 

Vodafone Idea FPO GMP or grey market premium is 1.50. According to investorgain.com, the expected listing price for VI FPO is 12.5, or a gain of around 13.64%.

Let's see what experts think about the FPO, whether or not investors should subscribe, and what kind of subscriptions they expect.

Also Read: Vodafone Idea raises 5,500 crore from anchor investors

Here’s what the experts predict

Mohit Gulati, CIO & Managing Partner of ITI Growth Opportunities Fund

"Since 2016, I have advocated the phrase: "Roti, Kapda, Maakan aur Data!"

Owing to that, I have remained invested in all the listed telecom players in India—RIL, Bharti, and VI(since 4 rupees!).

My logic for VI is simple- It's an old network with a carved niche where customer loyalty, despite all its deterioration, has still managed to stay. The perception that VI is a premium player vs, say, Jio, which is 'massy', has held a lot of high ARPU lazy postpaid customers staying on board even though it's the only network with no 5G yet!

From the GOI's perspective, they can't allow a duopoly to own this space; this, clubbed with the sentimental block of driving away an incumbent British Telco out of the country owing to high spectrum fees and taxes, won't do well for Delhi's global ambitions and ease of doing business narrative.

This FPO will receive a great response, and I'm very confident that the company will return to its past strength with new 5G services and the almost imminent post-election increase in tariffs across all telcos in India.

All in all, a must subscribe from my end! ," said Gulati.

Also Read: Vodafone Idea to launch 18,000 crore FPO at 10-11 price band

Arun Kejriwal, founder of Kejriwal Research and Investment Services

Kejriwal claims that there is a lot of expectation and talk that this scrip would follow Yes Bank's lead and that there will be a lot of interest after this issue. There will be a chance for investors to profit handsomely. Without any doubts, the scrip should do well since there is a lot of demand in it and a substantial or respectable premium being offered on the grey market. Regarding the application, it is justified because there is a 15-20% profit margin to be made now. It's uncertain if it will stay there or if it will somewhat rise or decline.

“However, the intention of the government is very clear. They don't want this company to fail and allow this important sector to be a duopoly. So they will back this company. With the fund raise, they would look into capex, which they haven't done in a very long time," added Arun. 

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities

The Vodafone Idea FPO is believed to be going big. If it is completely subscribed, Tapse claims, it will be the largest FPO in history, surpassing the 15,000 crore Yes Bank and 10,542 crore ONGC offers.

According to Prashanth, Vodafone Idea is now facing financial strain to maintain its balance sheet and eventually operate the firm in a competitive market because of its debt and unpaid AGR to the government.

If FPO's complete subscription would bring the firm a significant financial boost and allow it to spend and grow more quickly in its 4G infrastructure and the establishment of 5G infrastructure, which is urgently needed.

"Both the industry perspective and the execution strategy are critical to the FPO's success. Given that I think the FPO offer price range is a little conservative  for investors, I think a lot of funds or investors will be drawn in by the industry's projected growth," said Tapse.

Also Read: IPO this week: Vodafone Idea FPO, 2 SME issues and 2 new listings scheduled for this week; check full list here

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 17 Apr 2024, 01:49 PM IST
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