Vodafone Idea FPO opens today. Should you bid? Here's what GMP experts say on the subject of ₹18,000 crore

Vodafone Idea FPO subscription date starts today (Thursday 18th April) and ends on Monday 22nd April. The Vodafone Idea FPO price range has been fixed in the range of ₹10 to ₹11 each. There is a minimum bid limit of 1,298 shares, beyond which bids can be submitted in multiples of 1,298 shares. All market experts seem to be bullish on the FPO issue.

The total offering size of the Vodafone Idea FPO includes fresh issue of shares with a total value of up to ₹18,000 Crore.

According to the Red Herring Prospectus (RHP), the Company will use the net proceeds from the New Issue for: (i) the acquisition of equipment for the expansion of its network infrastructure in the amount of ₹12,750 crore; This includes (a) the establishment of new 4G sites; (b) expanding capacity at both existing and new 4G sites; and (c) the deployment of new 5G sites; (ii) Payment of certain deferred spectrum payments to the DoT and the applicable GST thereon in the amount of ₹2,175 crore; and (v) the remaining amount for general corporate purposes.

Also Read: Vodafone Idea FPO: 10 Important Things You Should Know ₹The 18,000-crore anchor book edition opens today

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According to BSE data, the government's stake in Vodafone Idea is 32.19% based on the shareholding pattern for the quarter ended March (Q4FY24).

According to news reports, in 2022, Vodafone Idea converted its unpaid debts to the government into a 36% stake, making the Indian government the company's largest shareholder.

On Tuesday, Vodafone Idea share price closed 1.82% lower ₹12.92 per person at BSE.

Vodafone Idea is FPO GMP or Gray Market Premium ₹1.50. According to investorgain.com, the expected list price for VI is FPO ₹12.5 or an increase of around 13.64%.

Let's see what experts think about the FPO, whether investors should subscribe or not and what kind of subscriptions they expect.

Also read: Vodafone Idea rises ₹5,500 crore from anchor investors

That's what the experts predict

Mohit Gulati, CIO and Managing Partner of ITI Growth Opportunities Fund

“Since 2016, I have been championing the phrase: “Roti, Kapda, Maakan aur Data!”

This is why I remain invested in all the listed telecom operators in India – RIL, Bharti and VI (since Rs 4!).

My logic for VI is simple: it's an old network with a carved niche where customer loyalty has still been able to persist despite all the deterioration. The perception that VI is a premium player compared to, say, Jio, which is “massive,” has kept many lazy, high-ARPU postpaid customers staying on board, even though it is the only network that doesn't have 5G yet has!

From the Indian government's perspective, they cannot allow a duopoly to own this space; This, coupled with the sentimental block on driving an established British telecom company out of the country over high spectrum charges and taxes, will not be good for Delhi's global ambitions and ease of doing business.

This FPO will receive a great response and I am very confident that the company will return to its previous strength with new 5G services and the almost imminent post-election tariff hike for all telecom companies in India.

All in all, an absolute must for me! said Gulati.

Also read: Vodafone idea to start ₹18,000 crore FPO ₹Price range 10-11

Arun Kejriwal, Founder, Kejriwal Research and Investment Services

Kejriwal claims that there are a lot of expectations and talks that this stock price would follow Yes Bank's example and there will be a lot of interest after this issue. Investors have the chance to profit handsomely. Undoubtedly, the scrip is likely to perform well as the demand is high and there is a significant or respectable premium on offer in the gray market. The request is justified as there is now a profit margin of 15-20%. It is uncertain whether it will stay there or whether it will rise or fall a little.

“However, the government’s intention is very clear. They don't want this company to fail and this important sector to become a duopoly. That's why they will support this company. With fundraising, they would look at capital expenditure, which they have not done for a long time,” Arun added.

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities

It is assumed that Vodafone's FPO idea will make a big impact. When fully subscribed, it will be and surpass the largest FPO in history, according to Tapse ₹15,000 crore Yes Bank and ₹10,542 crore ONGC offers.

According to Prashanth, due to its debts and unpaid AGR to the government, Vodafone Idea is now facing financial difficulties in maintaining its balance sheet and ultimately operating the company in a competitive market.

If the full subscription to FPO would bring a significant financial boost to the company and enable it to invest and grow faster in its 4G infrastructure and building the much-needed 5G infrastructure.

“Both the industry perspective and execution strategy are critical to the success of the FPO. Since I think the price range of the FPO offering is a bit conservative for investors, I think the projected growth of the industry will attract many funds or investors,” Tapse said.

Also Read: IPO this week: Vodafone Idea FPO, 2 SME issues and 2 new listings planned for this week; The full list can be found here

Disclaimer: The above views and recommendations are those of individual analysts, experts and brokerage firms, not Mint. We recommend investors consult certified experts before making an investment decision.

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