Vodafone Idea FPO: Kotak highlights 3 crucial points how the public issue will impact the company
Vodafone Idea FPO: The follow-on public offering (FPO) by Vodafone Idea, valued at ₹18,000 crore, is seen by domestic brokerage Kotak Institutional Equities as a positive move, even if it was somewhat delayed. It will likely plug the network coverage gap and boost the company's competitiveness relative to its peers.
As per Vodafone Idea FPO's red herring prospectus (RHP), the company's peers are Bharti Airtel Ltd (with a P/E of 84.37), Bharti Hexacom Ltd (with a P/E of 51.91), and Reliance Jio Infocomm Ltd. The brokerage also expressed confidence that Vodafone Idea would be able to obtain more bank funding after its bank debt has been significantly reduced.
Also Read: Vodafone Idea to launch ₹18,000 crore FPO at ₹10-11 price band Throwing light on the FPO plans, the brokerage firm has highlighted three points: while the fund-raise should improve the company's short-term prospects, the brokerage is still worried about potential large stock dilution (on the conversion of GoI dues) and does not believe the company will gain any appreciable market share from competitors. In the worst-case scenario, minority investors would not have much opportunity for considerable upside as the GoI may own an entirely diluted 80%+ stake in Vodanfone Idea.
Vodafone Idea FPO is scheduled to open on Thursday, April 18, and close on Monday, April 22, per a BSE filing on Friday. "Exciting news! Mint is now on WhatsApp Channels
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