Is the worst over for Vodafone Idea stock?

India’s third largest telecom player, Vodafone Idea, has been in the news for quite some time now, for all the right reasons.
Starting from the government’s relief package in September to tariff hikes in November, the debt-laden telco seems to be getting its act together.
Now, according to a Business Standard report, the company has managed to raise funds for interest payment to its bondholders due on December 13.
Reacting to the report, shares of the company zoomed 16.5 per cent intra-day to hit a fresh 52-week high of Rs 16.6 per share. This was also the share’s highest level since May 2019.

So, do these developments signal at a change of fate for Vodafone Idea? Not really, feel analysts.
According to Balaji Subramanian, telecom sector expert at IIFL Securities, the tariff hike would offer a welcome relief for Vi. But, it is just the first step in the right direction. The company still has a long way to go before it becomes competitive.
Remember, Vi has the lowest ARPU – or average revenue per user -- among telecom companies.

That apart, Vodafone Idea’s market share loss has continued in the first half of fiscal 2021-22, though the pace of market share loss has moderated.
Given this, Tarun Lakhotia and Hemang Khanna of Kotak Institutional Equities believe VIL may find it difficult to reverse the loss of subscribers as it is expected to remain behind Bharti Airtel and Reliance Jio on pan-India network coverage and capabilities (4G/5G) as well as service offerings.

From an investment viewpoint, AK Prabhakar, head of research at IDBI Capital, prefers Bharti Airtel over Vodafone Idea as the latter has been continuously losing customers and the tariff hike, he believes, will likely benefit rival firms more.

That said, for short-term traders, Vi’s stock offers a great opportunity.

The stock has recently broken out on tech charts, and has crossed the 200-weekly moving average, placed at Rs 15.10, for the first time since February 2016.
With this, it is all set to rally towards Rs 21 levels, gaining almost 28 per cent in the short-term, from current levels. The immediate support levels are at Rs 12 and then at Rs 10.

Overall, since the moratorium on spectrum and adjusted gross revenue-related dues are just supports and not the primary source of income, the company must look at augmenting its revenue stream.

Now, coming to Friday’s session, primary market action will keep investors busy today.
To begin with, this week’s fourth IPO – that of Metro Brands – will open for subscription today, and will close on December 14.
The Rakesh Jhunjhunwala-backed Indian footwear speciality retailer aims to raise up to Rs 1,367.5 crore. The price band of the initial share sale has been fixed at Rs 485-500 per share.
That apart, the IPO of MapmyIndia will enter its second day today and has been subscribed over 1.5 times so far.
The third active IPO for today is that of Shriram Properties, which has been subscribed over little over 100 per cent so far. The issue will close for subscription today.
In the secondary market, investors will track news flow around the Omicron coronavirus variant, global cues, industrial production data and retail inflation data.
Besides, Star Health and Allied Insurance will debut on the bourses today.
India’s largest private health insurer cut the size of its initial public offering to approximately Rs 6,400 crore from Rs 7,249 crore earlier after a subdued response to the IPO last week.

Watch video