Vodafone Idea share price has gained 96% in last three days; here's why

Vodafone Idea share price has risen over 96% in last three days. Vodafone Idea share price which stood at Rs 2.95 on November 14, 2009 rose to Rs 5.80 today, translating into gain of 96.61% during the period. An infusion of Rs 1 lakh in this stock three days ago would now be over Rs 196,610 on BSE.

However, the past year has been bad for the telco with Vodafone Idea share losing 77.95% and falling 75% since the beginning of this year. In comparison, the benchmark Sensex gained 13% during the last one year and 12.5% since the beginning of this year.

Hope of receiving a revival package from the government after Q2 loss and announcement of hike in tariff from December 1 led to upbeat sentiment around the stock in last three sessions.

Also read: Phone bills set to rise as Vodafone Idea, Airtel plan tariff hike from December 1

On November 14 after market hours, Vodafone Idea posted India Inc's biggest ever quarterly loss of Rs 50,921.90 crore during the second quarter ended September 30, 2019 compared to net loss of Rs 4,973.80 crore in the same quarter last year and Rs 4,873.90 crore in the June quarter. Before this, auto firm Tata Motors had logged a record loss of Rs 26,961 crore for the December quarter of 2018. 

Losses widened in September quarter after Vodafone Idea made a provision for the Supreme Court's ruling on payment of average gross revenue (AGR) dues.

The company estimated liability of Rs 27,610 crore related to licence fee and Rs 16,540 crore for spectrum usage charges in Q2 based on Supreme Court's judgement. The mid cap stock fell 19% in early trade on November 15, but then rose as much as 56% from the day's lows after reports emerged the telco was in active talks with the government seeking financial relief following the Supreme Court ruling.

AGR impact: Banks fear telcos' loan defaults worth Rs 1.15 lakh crore

The stock which closed at Rs 2.95 on November 14 closed 24% higher at Rs 3.68 next day when stock market took into account the dismal earnings for Q2.  It rose 31.86% to Rs 3.89 intra day on November 15 on BSE.

The stock also saw high positive sentiment today after Vodafone Idea said it plans to increase mobile service rates from December 1. Vodafone Idea stock rose up to 29.75% to Rs 5.80 compared to previous close of Rs 4.47 on BSE.

Vodafone Idea and Bharti Airtel on Monday said they plan to raise mobile service rates from December. Vodafone Idea cited "acute financial crisis" as reason behind the increase in tariffs, whereas Airtel said the move is meant to keep the industry and the company "viable".

By Aseem Thapliyal