Vodafone Idea stock zooms 13% after Tuesday's crash, here's why

Vodafone Idea stock recovered over 8% today after MD & CEO Ravinder Takkar said the government of India has no desire to run the company. The statement comes a day after the company said it plans to make the government its largest shareholder in lieu of conversion of the full amount of interest related to spectrum auction instalments and AGR dues.The share closed 20.53% lower at Rs 11.80 yesterday.

Vodafone Idea share opened at Rs 12.10 in today's session against the previous close of Rs 11.80. The share of the loss making telco touched an intra day high of Rs 13.3, rising 12.71% on BSE.

 At 1:10 pm, the telecom stock was trading 11% higher at Rs 13.10. The large cap stock has gained after three days of consecutive fall. The share trades higher than 100 day and 200 day moving averages but lower than 5 day, 20 day and 50 day moving averages.

Total 456.35 lakh shares of Vodafone Idea changed hands amounting to a turnover of Rs 56.94 crore on BSE. Market cap of the telco rose to Rs 36,062 crore.

Vodafone Idea share has gained 3.63% in one year but lost 18.35% since the beginning of this year.

The stock also recovered today amid analysts commenting that the conversion of dues into equity for the government was a credit positive for investors.

The proposal of making the government single-largest shareholder of the company with a 35.8 per cent stake could be a big positive for the beleaguered stock, reports said.

This comes after the board of the telco approved conversion of the full amount of interest related to spectrum auction instalments and AGR dues to the government into equity.

Other promoter shareholders of the company will be Vodafone Group (28.5 per cent) and Aditya Birla Group (around 17.8 per cent).

"The Net Present Value (NPV) of this interest is expected to be about Rs 16,000 crore as per the Company's best estimates, subject to confirmation by the DoT. Since the average price of the Company's shares at the relevant date of 14.08.2021 was below par value, the equity shares will be issued to the Government at par value of Rs 10/- per share, subject to final confirmation by the DoT. The conversion will therefore result in dilution to all the existing shareholders of the Company, including the Promoters," the company said on Tuesday.