Vi Shares Jump 10% on Govt. Equity Conversion: What’s Next?

Vodafone Idea Ltd. (VI) shares rose 10% in the opening session on April 1 after the company stated that the Central government will convert its outstanding spectrum dues into equity shares. Indus Towers shares also rose by 7%.

VI would convert debt into stock worth Rs 36,950 crore by issuing 3,695 crore equity shares at a price of Rs 10 per share. Nonetheless, Vodafone Idea shares recently closed at Rs 6.8 each on the stock exchanges.

VI shares were trading at Rs 7.48 on the NSE at 9.50 am, up 10% from the conclusion of the previous session. The price of Indus Tower’s shares was Rs 357.35 per share, up 6.9%.

The Government of India’s stake in Vodafone Idea will rise from 22.6 percent to 48.99 percent after the conversion of equity shares. “The promoters will continue to have operational control of the company,” the company stated in a filing with the stock exchanges.

The telecom operator claims that, in accordance with the Companies Act of 2013, the issue price was established using the volume-weighted average price for the previous 90 trading days or the 10 days prior to the relevant date (February 26, 2025).

MoC Responds to Vodafone Idea: Here’s the Update

According to a press release from Vodafone Idea, the conversion was authorized by an order issued by the Ministry of Communications on March 29, 2025, in accordance with the Telecom Reforms Package of September 2021. The order was delivered to the business on March 30.

The government has now turned Vodafone Idea’s debt into equity for the second time. Total Debt of Rs 16,133 crore was converted to equity in 2023 at a price of Rs 10 per share.

Vodafone Idea: Why Motilal Oswal Recommends Selling Now

The stock is recommended for sale by Motilal Oswal, who has raised the target price from Rs 5 per share to Rs 6.50 per share. “Vi is still a high-risk, high-reward strategy,” Motilal Oswal said. Their main worry is that “Vi would continue to require more relief from the Govt on AGR dues as well as spectrum payments beyond H1FY28,” even after the conversion of spectrum due into equity.

According to them, the government’s decision to convert Vi’s outstanding spectrum auction dues will improve its liquidity constraints until H1FY28 and lower Vi’s spectrum repayments by Rs 42,000 crore between FY26-FY28.
“Any further equity conversion of dues could lead to Govt’s stake crossing 50%, which could turn Vi into a public sector unit (PSU),” as the government’s stake increased to 49% following the most recent equity conversion.

Vodafone Idea Stock: CITI Says ‘Buy’ with Rs 12 Target Price.

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According to Citi, this significant show of government backing is a substantial plus. According to them, VI should see cash flow relief for the ensuing three years, which will aid in the repayment of the entire loan. The promoters will continue to have operational control over the business, and they anticipate short-term growth in the stock price. With a target price of Rs 12 per share, they advise buying.

Vodafone Idea: Macquarie’s Rs 7 Target Price Explained

Macquarie describes the current government action as a “bandage measure” and draws attention to the substantial dilution of equity that results from it. They express concerns about the insufficient organic production of free cash flow. With a target price of Rs 7 per share, they have a neutral rating. They claim that Bharti and Jio still see improved possibilities that will propel a positive trajectory for earnings, cash flow, and returns.