September 11, 2024
New Delhi, India
On September 6, Aditya Birla Group chief Kumar Mangalam Birla acquired 1.86 crore shares of Vodafone Idea Ltd., according to official data. This move comes on a day when Vodafone Idea shares fell over 11%, following a “sell” rating from brokerage firm Goldman Sachs, which set a price target of ₹2.5, suggesting a potential downside of 80%.
Key Details:
- Shares Acquired: Kumar Mangalam Birla purchased 1.86 crore shares, while Pilani Investment acquired 30 lakh shares on the same date.
- Stock Performance: On September 6, Vodafone Idea’s stock dropped over 11% after Goldman Sachs maintained its “sell” rating with a target price of ₹2.5.
- Market Outlook: Goldman Sachs projects an additional 300 basis points decline in Vodafone Idea’s market share over the next 3-4 years, alongside significant AGR and spectrum-related payments expected to begin in FY 2026.
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Creeping Acquisition Context:
This purchase by Kumar Mangalam Birla is seen as a “Creeping Acquisition,” where an investor gradually increases their stake in a company over time. According to the Securities and Exchange Board of India (SEBI), the creeping acquisition limit stands at 5% for financial years, although preferential allotments have a higher limit of 10%.
Shareholding Pattern:
- Promoters: Held a 37.17% stake as of July 19, 2024. The promoter group has reduced its holdings from 48.91% in March 2024.
- Foreign Institutional Investors (FIIs): Increased their stake from 2% in March 2024 to 12.8% by July 2024.
- Retail Investors: Their shareholding surged over 500 basis points to 19.9% between March and July 2024.
Market Reactions and Analyst Views:
While Goldman Sachs maintains a bearish stance on Vodafone Idea due to cash flow and market share recovery concerns, international brokerage UBS offers a more optimistic view. UBS anticipates a positive impact from ongoing tariff hikes, expecting around 60-75% of these hikes to reflect in revenue within three quarters. UBS also notes reduced churn rates due to fewer double SIM users.
Investment Implications:
Kumar Mangalam Birla’s stake increase could signal confidence in Vodafone Idea’s long-term recovery potential, despite the challenging outlook presented by some analysts. The market will be closely watching further developments in Vodafone Idea’s strategy to stabilize its finances and regain market share.
Vodafone-Idea shares were trading at Rs. 13.52 at 12:22 PM IST today.
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