Home / Markets / Stock Markets /  Vodafone Idea shares skyrocket after relief in AGR dues payment. Buy or sell?

Vodafone Idea shares: After getting relief from the Government of India (GoI) on AGR dues payment, Vodafone Idea share price has been iin uptrend since morning. Vodafone Idea share price today opened upside and went on to hit intraday high of 8.55 apiece levels, logging to the tune of 25 per cent rise on Monday morning deals.

According to stock market experts, this Vodafone Idea share rally is completely short term sentiment as the decision of the company to convert the NPV of the interest related to deferment of spectrum auction instalments and AGR Dues into equity shares to be issued to the Government of India. They said that the rise is completely speculation as company's equity share value would balloon by near 50 per cent after this debt conversion into the equity shareholding. They also said that the company has been making losses on continuous basis and hence such steps are short lived as it won't change health of the company's fundamentals.

Speaking on Vodafone Idea share price rally, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Conversion of AGR dues into equity would lead to rise in equity share capital of the company that will bring down its EPS (Earning Per share). So, the recent rise is purely short termed and speculative as the decision won't be helpful in changing the health of company's fundamentals. Vodafone Idea has remained a loss making company for long and hence it won't be wise to buy the scrip just because it has given sharp upside movement today. There are better telecom stocks available in the market and hence my suggestion is to look at those quality shares."

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Advising Vodafone Idea shareholders to hold the scrip, Anuj Gupta, Vice President — Research at IIFL Securities said, "Vodafone Idea shares have given news-based breakout above 7.50 apiece levels and it is facing hurdle at 9 per share levels. if it manages to break this hurdle it may go up to 10 and then 12 apiece levels. So, those who have this stock may hold the stock maintaining stop loss at 7.50 levels. For fresh investors, I would recommend them to buy only when the stock closed above 9 per share levels. Above 9 one can buy the stock for 10 and 12 target but stop loss at 7.50 levels has to maintained strictly."

Vodafone Idea news

On Friday, Vodafone Idea informed Indian bourses about the relief in AGR dues repayment citing, "to convert the NPV of the interest related to deferment of spectrum auction instalments and AGR Dues into equity shares to be issued to the Government of India. The total amount to be converted into equity shares is Rs. 16133,18,48,990. The Company has been directed to issue 1613,31,84,899 equity shares of the face value of Rs. 10 each at an issue price of Rs. 10 each."

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

Asit Manohar
Chief Content Producer at Live Mint Digital Team
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