Idea Cellular zooms over 40% in two days as Vodafone confirms merger talks

The stock moved higher by 15% to Rs 113, extending its previous day's over 25% rally on the BSE.

Idea Cellular has moved higher by 15% to Rs 113, extending its previous day’s over 25% rally on the BSE after Vodafone on Monday said it is in talks to merge its unlisted Indian subsidiary with Idea. CLICK HERE TO READ FULL REPORT

Idea Cellular said the company constantly evaluates various opportunities for enhancing the stakeholders’ value. As a part of the exercise, the company has been in preliminary discussions with Vodafone.

The fundamental premise of preliminary discussions is based on equal rights between the Aditya Birla Group and Vodafone in the combined entity, it added.

Analysts at IIFL Institutional Equities believe that there is a high chance that the Vodafone-Idea merger will go through, considering the strong economic logic because of significant capex and opex savings.

The market is likely to push up the stock to a higher value even before the merger as appreciation of the upside gets clearer over the coming days. If the merger talks fall through, which is unlikely, the stock will not surrender yesterday’s gains wholly, and the likelihood of consolidation driving value will remain strong for a while. Vodafone’s retrospective tax case could obstruct the approvals, the brokerage firm said in company update.

At 11:53 am; the stock was up 14% at Rs 112, surging 44% in past two trading sessions from Rs 78 on Friday, January 27, 2017. In past eight trading sessions, it zoomed 66% from Rs 67.50 on January 18, as compared to 1.8% rise in the S&P BSE Sensex.

Idea Cellular with Rs 40,519 crore market capitalisation has become the third most valued listed company of AB Group, surpasses metal company Hindalco Industries having Rs 39,257 crore m-cap, the BSE data shows. UltraTech Cement and Grasim Industries are two group companies having m-cap more than Rs 40,000 crore each.

Idea Cellular now stands at 60th position in overall m-cap ranking against at 81th rank on Friday. It was at 87th position on January 18, the data shows.

In past two trading sessions, Idea’s m-cap increased by Rs 12,498 crore from Rs 28,021 crore. It now stands ahead of state-owned companies like Bharat Electronics, Power Finance Corporation and Bank of Baroda and private companies such as Cadila Healthcare, Britannia Industries and UPL.