Vodafone Idea FPO: At ₹18,000 crore, the largest follow-on public offer ever in India was fully subscribed today, the last day, with investors lapping up as many as 1,289.8 crore equity shares, according to the data available on stock exchanges. This happened in the afternoon itself. Notably, Vodafone Idea is on a huge fund-gathering drive with the total amount pegged as high as ₹45000 crore via both equity and debt routes. Vodafone Idea is the third largest telco in India after Reliance Jio and Bharti Airtel.
While retail investors have been quite wary of the FPO, there was no such hesitation seen in the non-institutional investors (NIIs) as they took up 2x offer in their quota. Qualified institutional buyers (QIBs) too oversubscribed to the FPO by as much as 1.34x. The retail investors have so far taken up just 43 percent of their allotment. Earlier, it was reported that ₹5,400 crore was raised from anchor investors with investment firms GQG and Fidelity doing most of the heavy lifting. In fact, over ₹12000 crore was raised by the end of day 2 by Vodafone Idea including the above figure.
Notably, before the Vodafone Idea FPO, the biggest such offer in Indian stock markets was that of Yes Bank in 2020 at ₹15,000 crore.
What should you do?
“Considering the near-term risks of continued losses, subscriber attrition due to lack of expansion of 4G services compared to its peers, VIL is a high-risk proposition in the short to medium term. The long-term outlook will depend on the restructuring of the debt and expansion in 4G & 5G offerings. Given the strong parentage support, we assign the subscribe rating for high-risk investors on a long-term basis,” LiveMint reported Geojit Finance as saying.
“We assign a “Subscribe” rating to this IPO as the company is a trusted brand with large subscriber base and enterprise customer base with longstanding relationships. Also, it is available at a reasonable valuation as compared to its peers and reasonable discount to its current market price,” indicated Marwadi Financial Services.
How Vodafone Idea will use the FPO proceeds
As per the prospectus, some ₹12,750 crore will be spent buying equipment for the expansion of its network infrastructure, which includes new 4G sites, boosting current 4G sites’ capacity as well as on new 5G sites.
Apart from that, another large chunk, as big as ₹2,175.31 crore, will go toward deferred payments for spectrum.
And the rest will be spent on various general corporate purposes such as funding working capital requirements.
Vodafone Idea share price, which has been on a losing trend over the recent months, was today quoting at ₹12.25 down 5.04% at 13.34 p.m.