Vodafone Idea’s Follow-On Public Offering Attracts Analyst Interest, Anchored by Reputable Institutional Investors

Vodafone Idea has initiated its Follow-On Public Offering (FPO) today, drawing attention from analysts amidst institutional investor enthusiasm. The FPO, which is open from April 18 to April 22, is priced between Rs 10-11 per share, offering a significant discount compared to the previous closing price.

Financial market experts, including Hemang Jani from Finazenn, view the pricing strategy favorably. Retail investors are advised to consider selling on listing day or holding the stock for potential gains over the next 6 to 12 months.

Analysts note that the anchor book for Vodafone Idea’s FPO has been robustly subscribed, featuring renowned institutional names such as GQG Partners, UBS, Norges, and Morgan Stanley Investment Management, alongside prominent domestic funds like HDFC, Quant, and Motilal Oswal.

Manish Chowdhury, Head of research at StoxBox, suggests that investors with a moderate to high-risk profile could find the FPO as a turnaround opportunity, albeit with a waiting period for the capital to manifest in business performance.

The FPO proceeds, amounting to Rs 18,000 crore, are poised to propel capacity expansion and reinforce the Average Revenue Per User (ARPU) for Vodafone Idea, narrowing the competitiveness gap with peers. Vodafone Idea is co-owned by the Aditya Birla Group and Vodafone, with a significant stake held by the Indian government.

Experts speculate that a potential short-term rally in the stock market is on the horizon following the fundraising from the FPO. Abhilash Pagaria of Nuvama predicts a 30-35% upward movement in the stock price over the next few months, potentially leading to inclusion in the MSCI index, attracting substantial passive flows.

While analysts warn of debt-related concerns that could cap the stock’s upside, the TOI Business Desk remains vigilant in providing essential updates on the evolving scenario.