Vodafone Idea shares up 8%, telco clarifies on Cabinet proposal; here's what analysts say

Shares of Vodafone Idea Ltd (VIL) on Tuesday jumped 18.63 per cent to hit an intraday high of Rs 8.28. The stock eventually settled 7.88 per cent higher at Rs 7.53. It saw high trading volume on BSE today as around 18.72 crore shares changed hands. The figure was way higher than the two-week average volume of 4.97 crore shares. Turnover on the counter came at Rs 147.92 crore, commanding a market capitalisation (m-cap) of Rs 52,483.96 crore.

Today's sharp upmove in VIL shares came after it was reported the Union Cabinet approved a proposal to waive the bank guarantees (BG) that telecom operators were required to provide for spectrum purchases up to 2022. Bourses BSE and NSE have sought clarification from the telecom operator over the same.

The telco, in response, said, "As and when a decision is communicated by the DoT (Department of Telecommunications) or any decision of government of India through a press release is available, the Company will make the necessary disclosures as required."

VIL posted a narrower year-on-year (YoY) consolidated net loss in the September 2024 quarter (Q2 FY25). During the quarter under review, VIL's loss came at Rs 7,175.9 crore as against Rs 8,737.9 crore in the year-ago period. However, the company's loss widened on a sequential (quarter-on-quarter) basis. It had posted a loss of Rs 6,432.1 crore in the previous quarter.

Revenue from operations in Q2 FY25 rose 2.02 per cent to Rs 10,932.2 crore from Rs 10,716.3 crore in the corresponding period last year. VIL's total subscriber base stood at 20.5 crore and 4G subscriber base came at 12.59 crore in Q2 FY25. The telco's ARPU, a key performance metric for telecom firms, was at Rs 166.

"For VIL, there are many things which are subject to government discretion and judgements that may come along. But, I think this company is going to stay and if you have a long-term horizon of 2-3 years, then things may turn out in its favour. The government is holding more than 30 per cent of the equity stake here. So, it is a multibagger as per my viewpoint," Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, told Business Today.

On technical setup, immediate resistance could be seen in the Rs 8.5-9.5 range.

"Support will be Rs 7.15 and resistance at Rs 8.5. A decisive move above Rs 8.5 level may trigger a further upside towards Rs 11. The expected trading range will be between Rs 6.5 and Rs 11 for the short term," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi.

"Avoid trades and remain on the sidelines until the stock demonstrates a significant and sustainable rebound above the Rs 9-9.50 range, said Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One.

VIL has successfully raised Rs 18,000 crore from its follow-on offering (FPO). It is currently involved in the process of rolling out its 5G services in select areas. The company was formed in 2018 when Vodafone Group merged its India business with Idea Cellular.