Vodafone Idea shares extend gains as stock jumps 22% in 2 days; what's next?

Shares of Vodafone Idea Ltd continued their upward move for the second consecutive session on Wednesday. The stock rose 2.84 per cent to hit a high of Rs 8.33. At this price, it has moved up 22.32 per cent in two trading days.

The recent climb came after the company said it would issue fresh equity shares worth Rs 36,950 crore, raising the government's stake in the struggling telco to 48.99 per cent. The move follows the Centre's 2021 telecom relief package and comes just weeks after Voda Idea CEO Akshaya Moondra's direct appeal to the Department of Telecommunications (DoT) for urgent equity conversion approvals. The new equity infusion is expected to ease pressure from mounting dues and regulatory payouts.

"Post the aforesaid issuance of equity shares, the government shareholding in the company will increase from existing 22.60 per cent to approx. 48.99 per cent. The promoters will continue to have operational control of the company," the telecom firm stated.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said, "The announcement of the government converting dues into equity is a positive development in the medium- to short-term. The stock is suitable only for high-risk appetite investors. We need to see improvement in the business parameters. However, one needs to check for strengthening of the key business indicators and ARPU (average revenue per user). Before taking any serious investment decision, a person needs to see how the company is going to increase its subscriber base and ARPUs."

Technically, support on the counter could be seen at Rs 6.50 level. An analyst suggested considering a 'buy-on-dip' strategy for Voda Idea shares.

Kunal Kamble, Senior Technical Research Analyst at Bonanza Group said, "From a directional perspective, the stock is indicating a bullish trend. A 'buy-on-dip' strategy can be considered in Vodafone Idea as long as it sustains above Rs 6.50 for upside targets of Rs 11-13 in the near term."

Kkunal V Parar, Vice-President of Technical Research and Algo at Choice Broking, said, "We can see an upside move towards Rs 8.50-10.50 levels. If you have a position in the counter then hold it. On the downside, support would be placed at Rs 6.50."

On the earnings front, the operator's consolidated net loss reduced to Rs 6,609.3 crore in the December 2024 quarter (Q3 FY25) from Rs 6,986.7 crore in the year-ago period. The telecom operator's revenue from operations climbed 4.16 per cent to Rs 11,117.3 crore in Q3 FY25 as against Rs 10,673.1 crore in the corresponding period last fiscal.

Voda Idea mentioned that the 4G subscriber base stood at 12.6 crore at the end of Q3 FY25, increasing from 12.56 crore as of Q3 FY24. "Customer ARPU (ex M2M) improved to Rs 173 vs Rs 166 in Q2 FY25, up 4.7 per cent on QoQ basis, driven by tariff hike and customer upgrades," it added.

VIL was formed in 2018 when Vodafone Group Plc merged its India business with Idea Cellular. Promoters held a 38.80 per cent stake in the operator as of January 9, 2025, a 1.48 per cent uptick from 37.32 per cent on December 31, 2024.