QIBs increase subscription to 13% on first day so far; check the latest GMP – .

Vodafone Idea’s follow-on public offer (FPO) evoked a mixed response from investors in the early hours of the first day of the bidding process. The auctions for this issue, subscription to which began on Thursday April 18, were mainly conducted by institutional bidders.

Telecom operator Voda Idea is selling its shares in the price range of Rs 10-11 apiece. Investors can apply for a minimum of 1,298 shares and its multiples thereafter. The Rs 18,000 crore FPO issue includes a fresh share sale of 16,363,636,363 shares, making it the largest follow-on offering in Indian Markets.

According to the data, investors placed bids for 1,65,57,70,336 shares, or 13 percent, compared to the 12,60,00,00,001 shares offered for subscription on Thursday, April 18 at 2:30 p.m. The three-day auction for the show will end on Monday, April 22.

The allocation for retail investors was only 4 percent subscribed, while the portion reserved for non-institutional investors was only 11 percent subscribed. However, the portion reserved for qualified institutional bidders (QIB) attracted bids to the tune of 30 percent, at the same time.

Vodafone Idea, incorporated in March 1995, is a telecommunications player that provides voice, data and value-added services in 2G, 3G and 4G technologies, such as short messages and digital services for businesses and consumers.

Vodafone Idea shares stood at a gray market premium of Rs 1.70 per share before listing, suggesting gains of around 15.45 per cent for investors over the FPO price. However, the stock rose over 4.8 percent to Rs 13.54 during Thursday’s trading session.

Brokerages are mostly positive due to anticipated pricing hikes, average revenue per user (ARPU) growth, capacity expansion and plans to curtail growth. Analysts who follow the matter believe that the fundraising will help the company cope with its financial crisis. However, they anticipate that user base growth and execution of recovery plans will be key things to watch.

Vodafone Idea FO is a step in the right direction as it would help the company improve its competitiveness in the near-duopolistic Indian telecom market. The company’s aim to improve its 4G penetration and launch 5G services in the coming quarters would improve ARPU, which is lower than its peers, said Manish Chowdhury, head of research at StoxBox.

“We believe that Vodafone Idea would be in a better position to raise funds in the future, both through equity and debt, to meet its obligations and growth plan. The recent capital infusion by the promoters and the government’s efforts to keep the company running inspire confidence in the company’s turnaround prospects,” he said, suggesting investors with a moderate risk appetite high to subscribe to a medium and long term perspective.

Vodafone Idea has reserved 50 per cent of the net offering for qualified institutional investors (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the shares. Retail investors will receive 35 percent of the net supply. The telecom operator has raised Rs 5,400 crore from several institutional investors through an anchor book.

Given 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, Geojit Financial Services said .

“The long-term outlook will depend on debt restructuring and the expansion of 4G and 5G offerings. Given the strong parentage support, we assign the subscription rating to high-risk investors on a long-term basis,” he said.

Axis Capital, Jefferies India and SBI Capital Markets are the lead managers of the Vodafone FPO, while Link Intime India is the issue registrar. FPO shares will be listed on the BSE and NSE stock exchanges on Thursday, April 25, 2024.