Vodafone Idea shares extend rally, rise 10% on talks of equity infusion

VI management had mentioned that the company's promoters will infuse a sum of up to Rs 2,000 crore by the end of the December quarter.

Shares of Vodafone Idea extended the rally from the previous session to zoom 10 percent more on January 1. The stock of telecom service provider under the Aditya Birla Group has surged over 30 percent across two sessions as the Street awaited clarity on the company's fundraising plans.

A total of 109 crore shares traded on the BSE and the NSE combined so far in the day, significantly higher than the one-week average of 69 crore shares and the monthly average of 42 crore shares.

At 10:35am, Vi shares were trading 10.6 percent higher at Rs 17.70 on the National Stock Exchange (NSE). The stock has more than doubled investors' wealth over the past six months, gaining 137 percent. In comparison, the frontline index Nifty 50 has risen around 12 percent during the same period.

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Reports suggest that the surge in the stock price in the last two sessions is a result of a supposed equity infusion by the promoters of the embattled telco.

Sources familiar with the negotiations informed Moneycontrol that Vodafone Idea's (Vi) share price surge over the past six months has hindered the expected financial injection into the financially struggling telecom firm. The sources, preferring anonymity, highlighted the stalled progress in the much-awaited fund infusion.

It is worth noting that the Vi management had mentioned that the company's promoters will infuse a sum of up to Rs 2,000 crore by the end of the December quarter.

"In the last quarter, we had received a letter from the promoters that they will support us to the extent of Rs 2,000 crore. Till date, they have not actually contributed anything. We got some bank funding to tide over the short-term mismatch that we had in the last quarter," CEO Akshaya Moondra had said during the earnings call.

The promoters’ commitment is there, he said. "They have said that they will support as and when required. And we expect that this promoters’ contribution should also come alongside the tie up with the external investor". The fundraising is most likely to conclude in this quarter. "That's our expectation," said Moondra.

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For the quarter ended September, Vodafone Idea’s losses widened to Rs 8,737.9 crore against Rs 7,595.5 crore in the same quarter last year. Its revenue from operations stood at Rs 10,716.3 crore, rising nearly 1 percent from 10,614.6 crore in the corresponding quarter.

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