Winning Bizness Desk
Mumbai. Vodafone Idea (VIL) shares are on the rise and it rose 3 per cent to Rs 16.70 during intraday trade on Wednesday, the highest level in the last three months. It is expected that this will improve the company's earnings. This level of the stock was the highest since February 27, 2024. The company had recorded a 52-week high level of Rs 18.42 on January 1, 2024. Vodafone Idea shares have gained 26 per cent in the last six trading days. In the last two trading days, the company's shares rose 6 per cent. This is because the telecom board plans to consider the issue of equity shares and/or non-convertible securities on a preferential basis to vendors in its meeting to be held on June 13, 2024. With the recent surge, Vodafone Idea stock is trading 51 per cent higher than its follow-on public offer (FPO) price of Rs 11 per share. The company had raised Rs 18,000 crore through its FPO. Vodafone Idea (Vi) had also raised Rs 2,075 crore by issuing 1395.4 million equity shares to promoter group companies at Rs 14.87 per share.
Telecom sector likely to see significant tariff hikes
Analysts believe that the Indian telecom sector is likely to see significant tariff hikes in FY25 and FY26, which along with better subscriber mix will help improve average revenue per user (ARPU) for all companies including Vodafone Idea. Vodafone Idea plans to make capital expenditure (capex) of Rs 50,000 crore to Rs 55,000 crore over the next three years (by FY27). This investment will be for expanding 4G coverage in 17 primary circles, 5G launch in key areas and capacity expansion to meet data demand. Last month, global brokerage firm UBS upgraded Vodafone Idea stock to a 'buy' rating and set a target price (TP) of Rs 18 per share. UBS believes that mobile prices for Vodafone Idea will increase by 15-20 percent in the next 12-24 months.
VI still has a long way to go
Nomura analysts recently upgraded Vodafone Idea stock to a 'neutral' rating and said that the company still has a long way to go, but now the situation has returned to normal and the company is preparing for future challenges. The global brokerage firm said in its note, the outlook for the industry has improved significantly with all companies united on the need for ARPU growth and the industry being established in the middle of the 3-private company market. According to BNP Paribas, 'This could limit the growth in market share of Airtel and Jio.
