Vodafone Idea Shares Plunge 19% After Supreme Court AGR Verdict

Vodafone Idea shares witnessed a sharp decline of 19% on Thursday, September 19, 2024, marking the biggest one-day drop since January 2022. The fall came in the wake of the Supreme Court’s dismissal of telecom companies' curative petitions challenging the quantum of their Adjusted Gross Revenue (AGR) dues.

The Supreme Court, in its ruling, upheld the AGR demand, rejecting claims from telecom companies of computational errors in the calculation of dues. Vodafone Idea currently owes ₹70,300 crore in AGR dues, exacerbating the company’s financial difficulties.

According to Balaji Subramaniam, Vice President at IIFL Securities, the Supreme Court's decision has created further cash flow challenges for Vodafone Idea. Subramaniam mentioned that if the ruling had been in favour of the telecom companies, Vodafone Idea's stock could have seen an increase of ₹5 per share. However, with the unfavourable verdict, Vodafone Idea’s ability to raise debt is now in question. The company’s debt-raising plans will be closely monitored, as they are crucial for funding its capital expenditure plans.

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The AGR issue has not only impacted Vodafone Idea but also Bharti Airtel, which currently owes ₹36,000 crore in AGR dues, according to IIFL Securities. However, analysts predict that Bharti Airtel could gain further market share given Vodafone Idea's continued struggles.

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Vodafone Idea shares closed at ₹10.44 on Thursday, down 19%, below its follow-on public offering (FPO) price.