Vodafone Idea shares rise up to 7% ahead of SC hearing on AGR plea, extend rally to 38% in 3 weeks

Vodafone Idea share price jumps

The shares of Vodafone Idea surged nearly 7 percent on September 23. The stock has now rallied around 38 percent in September so far as investors awaited Supreme Court's decision on possible relief from some AGR dues.

Vodafone Idea shares hit an intraday high of Rs 8.97 apiece, the highest level seen by the stock in more than seven months. The stock later pared some gains to trade around 5 percent higher at Rs 8.79 apiece.

Supreme Court set to hear telco's AGR relief plea on Friday

The Supreme Court is set to hear the telco's challenge to a fresh Rs 9,450-crore adjusted gross revenue (AGR) demand from the Centre on September 26 (Friday). Centre earlier told the apex court, "Not opposing Vodafone Idea plea, some solution is required, government is also an equity holder. Some solution may be required, subject to Supreme Court approval."

The case stems from the Court's March 18, 2020 order, which upheld AGR dues up to FY17 as calculated by the Department of Telecommunications (DoT) and ruled out any reassessment by operators.

The DoT had raised an extra demand on AGR dues worth Rs 2,774 crore for FY18-19. The petition said that out of the total Re 9,450 crore of demand, Rs 2,774 crore pertains to post-merger entity — Idea Group and Vodafone Idea — following their August 2018 consolidation, while Rs 5,675 crore relates to the pre-merger Vodafone Group’s liabilities.

Vodafone Idea has contested the calculation, claiming that certain amounts have been added twice and need reconciliation. The company has asked for a recalculation of dues, starting from the pre-FY17 period.

Citi calls Vodafone Idea a 'high-risk' buy

Brokerage firm Citi called Vodafone Idea shares a 'high risk' buy, but set a target price of Rs 10 per share. This implies an upside potential of more than 19 percent from the stock’s previous closing price of Rs 8.39 apiece.

According to the brokerage note cited by CNBC-TV18, Citi said the chances for a potential relief for the company have now increased. The shares of the debt-ridden telecom company had earlier seen significant plunge.

The shares of the telecom company have surged around 47 percent in just six weeks after hitting a 52-week low of Rs 6.12 per shares, which they had hit in August this year. The stock is however still down around 25 percent from their 52-week high of Rs 11.94 apiece.

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