Vodafone Idea, India’s leading telecom operator, launched its follow-on public offering (FPO) on April 18, 2024. The company is aiming to raise Rs 18,000 crore through the FPO, which is the largest follow-on offer in the Indian markets.
Subscription Details
The initial response from investors was mixed. As of 2:30 PM on April 18, bids were received for only 13% of the total shares offered. However, the portion reserved for qualified institutional buyers (QIBs) was subscribed 30%, indicating strong interest from institutional investors.
Retail investors: The allocation for retail investors, which is 35% of the net offer, saw a subscription of only 4%. This low initial subscription rate could be due to factors like the recent rise in Vodafone Idea’s stock price and the overall volatility in the stock market.
Non-institutional investors (NIIs): The portion set aside for NIIs, which is 15% of the net offer, attracted bids for 11%. This segment’s response was also muted, possibly due to concerns about the company’s financial health.
Expert Opinions
Despite the mixed initial response, brokerage firms and analysts remain cautiously optimistic about the FPO. Here’s a breakdown of their views:
Positive Outlook
StoxBox: Manish Chowdhury, Head of Research at StoxBox, believes the FPO is a positive step for Vodafone Idea. He expects the company to improve its competitiveness in the Indian telecom market by focusing on 4G penetration and launching 5G services. This focus on network expansion is expected to boost the company’s average revenue per user (ARPU).
Geojit Financial Services: While acknowledging the near-term risks associated with continued losses and subscriber attrition, Geojit recognizes the long-term potential of Vodafone Idea. The recent capital infusion by promoters and the government’s support instill confidence in the company’s turnaround prospects.
Cautious Approach
Geojit Financial Services: Despite the long-term potential, Geojit recommends subscribing to the FPO only for investors with a high-risk appetite and a long-term investment horizon. The success of the company’s revival plans and debt restructuring will be crucial factors to watch.
FPO Details and Anchor Investors
Price Band: Rs 10-11 per share
Minimum Investment: 1298 shares and multiples thereof
Anchor Investors: Vodafone Idea has already raised Rs 5,400 crore from several institutional investors through an anchor book placement. This indicates strong institutional support for the FPO.
Listing and Lead Managers
Listing Date: The FPO shares are expected to be listed on both BSE and NSE on Thursday, April 25, 2024.
Lead Managers: Axis Capital, Jefferies India, and SBI Capital Markets are the book-running lead managers for the FPO. Link Intime India is the registrar for the issue.
Overall, Vodafone Idea’s FPO has received a mixed initial response. While QIBs have shown strong interest, retail and non-institutional investors remain cautious. The success of the FPO will depend on the company’s ability to address its financial challenges and execute its revival plans.
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