Vodafone Idea Shares Drop 21% After Supreme Court Rejects AGR Plea - Read Now 

Vodafone Idea (Vi), once the largest telecom company in India following its merger, is now grappling with immense financial challenges, reflecting not only in its operations but also in its share price. Over the past two trading sessions, Vodafone Idea’s stock has taken a significant hit, dropping by over 21%. Currently, its stock is trading at around ₹10 per share, raising concerns among investors about when the company will bounce back, if at all.

Supreme Court's AGR Verdict: The Trigger Behind the Decline

The immediate cause of Vodafone Idea's recent stock decline is the Supreme Court’s rejection of the company’s curative petition regarding the Adjusted Gross Revenue (AGR) dues. The court’s refusal means Vodafone Idea must now pay around ₹70,300 crore in dues to the government. This comes as a huge blow, especially since the company’s own estimate of the dues is approximately ₹35,400 crore.

The AGR crisis has been looming over Vodafone Idea for a few years now. Despite multiple pleas and appeals, the telecom giant has failed to get any relief, putting it in a precarious financial position. The Supreme Court's recent decision has only worsened the company’s standing in the stock market.

Debt Burden and Dilution of Shares

Vodafone Idea has been struggling under a massive debt burden for quite some time. In an effort to improve its financial health, the company launched a Follow-on Public Offering (FPO), which resulted in the dilution of its shares. There are now over 6,305 crore shares of Vodafone Idea in the market, and its total market capitalization stands at around ₹71,304 crore, only marginally higher than the dues it owes to the government.

The excessive number of shares in the market has left many investors wary. While some may have hoped that the FPO would generate enough capital to stabilize the company, the influx of shares has actually diluted the stock’s value, making it difficult for any significant recovery to take place in the short term.

Mixed Reactions from Market Experts

Opinions among market experts remain divided regarding Vodafone Idea’s future. A report by Nomura India suggests that Vodafone Idea is going through its worst phase, but it may be on the verge of leaving it behind, giving the stock a ‘buy’ rating. However, other experts disagree. Business Standard reported varying stances, with Nuvama Institutional Equities recommending a ‘hold’ rating, JM Financials opting for a ‘sell,’ and Goldman Sachs labeling the stock as ‘underperform.’

Goldman Sachs’ pessimistic view stems from the sheer volume of shares available in the market. Even though promoter Kumar Mangalam Birla recently purchased 1.86 crore shares, and Pilani Investments bought an additional 30 lakh shares, these acquisitions have done little to impact the availability of the massive 6,305 crore shares in circulation. Thus, the market remains oversaturated, and the stock continues to struggle.

A Long Road Ahead for Vodafone Idea

Despite some optimism surrounding Vodafone Idea’s future, the company faces a long and challenging road to recovery. With substantial AGR dues, overwhelming debt, and diluted shares, investors will likely remain cautious. Promoter efforts to buy back shares and instill confidence have yet to yield significant results, and the market will need to see more concrete steps from the company before confidence is fully restored.

As Vodafone Idea navigates through this tough phase, its stock performance will be closely watched by both investors and market experts. Whether the telecom giant can stage a comeback or continue its downward trajectory will depend largely on how it handles its financial obligations and the competitive telecom landscape in India.

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