Vodafone Idea Shares Surge as Promoters' Fund Infusion Nears Reality

The shares of Vodafone Idea (Vi) continued their upward trajectory on Monday, fueled by optimistic expectations of a long-awaited fund infusion from its promoters.

Closing with gains of over 6%, Vi witnessed a remarkable intra-day surge of almost 15%, propelling the stock price to more than double in the last six months. On July 3, the stock stood at Rs 7.53, reaching Rs 16.99 on the BSE on Monday and hitting a 52-week high of Rs 18.42 during the day, resulting in a market cap of Rs 82,706.79 crore.

Investors strategically positioned themselves amidst speculations that Aditya Birla Group and Vodafone plc, the two promoters, might inject Rs 2,000 crore into the beleaguered telco. The banking sector is anticipated to follow suit with additional support, providing a crucial lifeline to Vi, which has been grappling with losses and subscriber churn.

Vi's CEO, Akshaya Moondra, reassured stakeholders during a call with analysts after the second-quarter results, stating that the expected fund infusion from the promoters is on the horizon. The commitment from the promoters was communicated in a letter received in the last quarter, promising support up to Rs 2,000 crore.

Despite delays in the contribution, Moondra emphasized the promoters' commitment and hinted at a synchronized infusion with external investor tie-ups. He indicated that the conclusion of this financial maneuver is anticipated within the current quarter.

Vi's recent challenges include a loss of 7.5 lakh mobile subscribers in September, leading to a dip in wireless user customers to 22.75 crore. The company reported a consolidated loss of Rs 7,595.5 crore in the second quarter ended September 30, 2023, emphasizing the critical need for financial support.

Investors and industry observers are keenly watching the unfolding developments, anticipating the positive impact of the expected fund infusion on Vi's financial health and market performance. The telecom industry's dynamics may undergo a notable shift, driven by the strategic moves of Vodafone Idea's key stakeholders.