Vodafone Idea FPO: Institutional investors boost subscription to 13% on the first day; find out the latest GMP

Investor reaction to the Vodafone Idea follow-on public offering (FPO) was not uniform in the early hours of the first day of the bidding process. Institutional buyers dominated the issue’s bidding, which began on Thursday, April 18, when subscriptions were opened.

Voda Idea, a telecom company, is offering its shares for sale for between Rs 10 and Rs 11 a share. A minimum of 1,298 shares and their multiples thereafter may be applied for by investors. With a fresh share sale of 16,363,636,363 equity shares, the Rs 18,000 crore FPO offering is the largest follow-on offer in Indian markets.

The data indicates that, of the 12,60,00,00,001 equity shares offered for subscription by 14.30 pm on Thursday, April 18, the investors placed bids for 1,65,57,70,336 equity shares, or 13 percent. On Monday, April 22, the three-day bidding period for the issue will come to an end.

Just 4% of the allocation designated for retail investors was subscribed, compared to only 11% of the share designated for non-institutional investors. But as of the same time, bids were received for 30% of the component reserved for qualified institutional bidders (QIBs).

Vodafone Idea is a telecommunications company that was founded in March 1995. It offers voice, data, and value-added services using 2G, 3G, and 4G technologies. These services include digital services and short messaging for both individuals and businesses.

Prior to listing, Vodafone Idea shares fetched a grey market premium of Rs 1.70 per share, indicating returns for investors of about 15.45% over the FPO price. However, during Thursday’s trading session, the stock increased by more than 4.8% to Rs 13.54.

The majority of brokerage businesses are doing well due to growth reduction strategies, average revenue per user (ARPU) growth, capacity expansion, and projected tariff hikes. Following the situation, analysts think that the company’s financial difficulties will be alleviated by the fundraising. But they believe that expanding the user base and carrying out the plans for revival will be the most important things to keep an eye on.

Vodafone Idea FO is a positive move for the corporation, as it will increase its competitiveness in the soon-to-be duopolistic Indian telecom sector. Manish Chowdhury, Head of Research at StoxBox, stated that the company’s goal to increase 4G penetration and introduce 5G services in the upcoming quarters will boost the ARPU, which is lower than peers.

“We think Vodafone Idea would be in a stronger position to obtain money in the future to finance its growth strategy and obligations, both through debt and equity. He advised investors with a moderate to high tolerance for risk to subscribe for a medium- to long-term view, saying that the company’s turnaround chances are encouraged by the promoters’ recent capital infusion and the government’s attempts to maintain the business as a going concern.

Qualified institutional investors (QIBs) will receive 50% of Vodafone Idea’s net offer, with non-institutional investors (NIIs) receiving 15% of the shares. Thirty-five percent of the net offer will go to retail investors. Through an anchor book, the telecom operator was able to raise Rs 5,400 crore from a number of institutional investors.

In light of the potential for short- to medium-term losses and subscriber attrition as a result of 4G services not being expanded as much as their competitors, Geojit Financial Services stated that VIL is a high-risk investment.

“The development of 4G and 5G offerings and the restructuring of the debt will determine the long-term prognosis. We assign the subscribe rating to high-risk investors on a long-term basis because of the strong parentage support,” the statement stated.

The issue registrar is Link Intime India, and the book running lead managers of the Vodafone FPO are Axis Capital, Jefferies India, and SBI Capital Markets. On Thursday, April 25, 2024, the BSE and NSE exchanges will list the FPO shares.

Disclaimer: LKoDeals does not offer investment advice; the news it covers about the stock market is provided solely for informative purposes. It is recommended that readers get advice from a licensed financial advisor prior to making any investing decisions.

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