Vodafone Idea shares fall up to 20% on SC’s AGR plea rejection. Is the worst over?

Shares of Vodafone Idea on Thursday crashed 20% to its 52-week low of Rs 10.33 on BSE after the Supreme Court rejected a plea to re-calculate the Adjusted Gross Revenue (AGR) dues and investors are now fearing more downside in the coming days.

The apex court reaffirmed its decision on the AGR ruling against telecom companies, maintaining the full amount of the AGR demand, which translated into a burden of Rs 58,000 crore. With the interest levy, that burden has now gone up to Rs 70,320 crore as of the end of FY24.

Following the update, here is what analysts say about the stock:

Vodafone Idea will have to do some kind of a fundraise which could be more from shareholders, believes Sushil Choksey of Indus Equity Advisors. The company will have to shore up the balance sheet to strengthen and repay the AGR dues unless government gives them more time to pay the same, he said.

“To survive you have to earn more and competition is already inching up with the tariff hike and they are looking towards betterment. So, if any kind of burden comes to one player, either you lose the consumer base or all of them, three of them will raise the rates and the benefit goes to the rest,” Choksey added.

However, Choksey is affirmative that the Government of India's intent is to keep all three (Jio, Ariel and Vodafone Idea) in the market, specifically Vodafone, and hence they will make sure that all kinds of support is provided to the shareholders

He believes that the outcome of this scenario will be positive from a shareholder perspective even if it may be not positive for the short term.

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Meanwhile technically, the stock has broken its crucial support area of Rs 12.5 -Rs 12 and it has been like a nosedive for the stock of sorts in today's session.

“Now what that opens up is a room for more downside and the next psychological level that we can see is at around 10. But technically speaking the crucial support is coming in around Rs 9, so that is another 20% down move that can happen especially the way the sell-off has been there today,” said Rahul Sharma of JM Financial Services.

Speaking of Vodafone Idea, Sharma said that clearly below the Rs 12 level, he further expects more weakness to continue in the stock.

Around 2 pm today, the shares of Vodafone Idea were 14.6% lower at Rs 11.02 on BSE.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)