Vodafone Idea FPO has opened today for subscription and analysts are out with their coverage report on the Mumbai-based telecommunications operator player. The company aims to raise INR 18,000 crores through a fresh issue of shares. Priced at INR 10 – 11 per share, the IPO will remain active through 22 April 2024. Vodafone Idea FPO ratings are mostly positive and analysts have highlighted multiple positive factors including strong operating performance, better cost-efficiencies, and a deep understanding of the telecommunications market.
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Vodafone Idea FPO Ratings: Here is Why Analysts Are Positive Ratings
Analysts at Hem Securities have a positive view of the prospects of Vodafone Idea FPO. “Company has large subscriber base with extensive telecommunication network & existing network built on 5G-ready architecture. Also, the company has a large enterprise customer base with longstanding relationships & extensive distribution and service network. Hence, looking after all the above we recommend “Long term Subscribe” on the issue.”
Geojit is another brokerage house with positive Vodafone Idea FPO recommendations albeit with a word of caution. “Considering the near-term risks of continued losses, and subscriber attrition due to lack of expansion of 4G services compared to its peers, VIL is a high risk proposition in the short to medium-term. The long-term outlook will depend on the restructuring of the debt and expansion in 4G & 5G offerings. Given the strong parentage support, we assign the Subscribe rating for high risky investors on a long-term basis.”
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Similar positivity was expressed by Marwadi Financial Services in its research note. “We assign a “Subscribe” rating to this IPO as the company is a trusted brand with large subscriber base and enterprise customer base with longstanding relationships. Also, it is available at a reasonable valuation as compared to its peers and reasonable discount to its current market price.”
Canara Bank Securities also has a subscribe rating on the FPO. “The competitive landscape poses a potential threat to Vi’s market share and penetration in the future. From a valuation perspective, Vi’s EV/EBITDA ratio for FY2023 stands at 18x, above the industry average of approximately 15-16x for the same period. Therefore, we recommend Vi for long term considering their capacity expansion strategy which gives potential for ARPU expansion.”
IIFL Securities is another brokerage house with positive Vodafone Idea FPO recommendations. “We upgrade Vodafone Idea (Vi) to ADD with Rs14 TP and recommend subscribing to the FPO. We also upgrade Indus Towers to BUY with Rs379 TP as it would benefit from Vi’s improved financial position and subsequent rollouts, as well as potential reinstatement of dividend. We see two rounds of tariff increase in the next three years, which will benefit all three telcos. There is a decent chance of a reduction in AGR liability, a positive for Bharti and Vi. Based on the above factors, we raise Bharti’s TP to Rs1379 from Rs1215 and JIO’s EV to USD104bn from USD96bn.”
Jainam Broking is positive about the prospects of the company and has recommended investors Subscribe for long term to the offer.
Vodafone Idea FPO Recommendation: Not Everybody Is Impressed
Elite Wealth recommended investors to Avoid the public offer while stating the following risk factors:
- The company has not complied with certain covenants specified in its financing agreements and accumulated a large amount of debt.
- The company faces intense competition which may affect its profitability and market share.
- The company has been experiencing losses for the past few years and may not achieve or sustain profitability in the future.
- VIL, along with certain of its Subsidiaries, Promoters, Directors, and Group Companies, are currently involved in certain legal proceedings. Any adverse outcome in these proceedings may impact its operations, business, and reputation.
Nevertheless, it is quite clear that most brokerage houses have sounded positive notes in Vodafone Idea FPO Ratings. According to the data collected by IPO Central from the grey market, the offer is not only actively traded but is also commanding a healthy premium indicating a positive listing.
