Vodafone Idea Soars 26% After Govt Converts ₹36,950 Cr Dues to Equity — Is It Time to Buy?

The government becomes Vodafone Idea’s largest shareholder with a 49% stake, sending shares soaring. But with debt concerns and execution risks, is the rally sustainable?

April 1, 2025: New Delhi:
Vodafone Idea shares surged nearly 26% on Tuesday to hit ₹8.56 on the NSE, before closing 20% higher at ₹8.17, after the government converted ₹36,950 crore worth of the telecom operator’s dues into equity. This move boosts the government’s stake in the company to 48.99%, making it the largest shareholder.

Also Read: Govt to Raise Stake in Vodafone Idea to 48.99% via Equity Conversion

Under the deal, Vodafone Idea will issue 3,695 crore equity shares at ₹10 each — a 47% premium over the last closing price. Promoter stakes of Vodafone Plc and Aditya Birla Group will drop to 16.1% and 9.4% respectively, though operational control remains unchanged.

Also Read: Vodafone Idea Shares Hit 10% Upper Circuit Amid AGR Waiver Buzz

💬 What Analysts Are Saying

Citi called the development “materially positive” for cash flow and debt fundraising.
It set a buy rating with a price target of ₹12, implying a 77% upside.
However, Motilal Oswal and JM Financial maintained ‘Sell’ ratings, citing unresolved debt issues and unclear tariff hikes.

🔍 Key Risks Highlighted by Brokerages

VIL needs tariff hikes to boost ARPU from ₹163 to ₹380 by FY28.
Uncertainty looms over the ₹25,000 crore debt raise.
A successful ₹500–550 billion capex plan is crucial to halt market share erosion.

📊 Impact on Indus Towers

Citi is bullish on Indus Towers, one of Vodafone Idea’s largest creditors and infrastructure providers. It expects:

An improved cash flow outlook
Potential dividend reinstatement
A 40% upside with a price target of ₹470

“Stabilisation of Vodafone Idea’s finances can help Indus recover past dues and support tenancy growth from upcoming 5G rollout,” Citi noted.

🧠 Should You Buy Vodafone Idea?

While Citi remains optimistic, other brokerages advise caution. The long-term viability of VIL hinges on multiple factors:

Executing tariff hikes
Raising fresh debt
Sustaining user base growth

Until then, the stock remains speculative and high-risk despite the short-term boost.

📌 Tags:

Vodafone Idea, Vi share price, telecom sector, government equity conversion, VIL stake, Vodafone Idea stock analysis, Aditya Birla Group, Vodafone Plc, ARPU growth, tariff hike, telecom stocks India, Indus Towers, stock market rally, Vi debt raise, Citi research, Motilal Oswal, JM Financial, FPO news, 5G India

Misha Bhatia