Tuesday, October 19, 2021

Amid closure buzz, top fund managers bet big on Vodafone revival plan

HDFC AMC and Aditya Birla MF, are among the top five funds in the country by assets, have put in big bets on Vodafone Idea's survival

Even as the future of top telecom operators, Vodafone Idea remains unsettled with closer buzz making rounds, top fund managers including HDFC AMC and Aditya Birla MF have thrown their weight behind the company’s revival bid.

HDFC AMC and Aditya Birla MF, who are among the top five funds in the country by assets, have put in big bets on Vodafone Idea’s survival. A couple of more prominent fund managers have also added the stock to their portfolios.

HDFC AMC bought 1.41 crore shares of the beleaguered telecom company in June. Vodafone was its biggest buy of the month in terms of the number of shares. Aditya Birla MF bought around 19 lakh shares of the company.

During the same month, the auditor of the telecom operator raised concerns over its ability to remain a ‘going concern’ due to a streak of losses. Huge bank debts have also not helped the firm. Voda Idea has been struggling to raise funds, which has led to a severe cash crunch.

The company has reported losses for 11 consecutive quarters now. In the past 19 quarters, it has reported profit only once, data available with Accord Fintech showed as losses mounted to a total Rs 1,39,220.7 crore.

Among the two key reasons behind Vodafone’s losses are backbreaking statutory dues, which it is yet to pay in full, and consistent loss of users, who have migrated to rivals Bharti Airtel and Reliance Jio.

The share price of Vodafone Idea has plummeted to single digits, with many analysts predicting further fall. Currently, the stock trades around Rs 9 a share, just a shade of Rs 100-110 that it used to trade at in 2013.

Meanwhile, it seems some fund managers believe the company will come out of the crisis successfully. The government has said in the past that it wants to maintain the three-private-player structure in the telecom sector but has not shown any willingness to relent on the AGR dues.

Also, fund managers at DSP Mutual Fund and Motilal Oswal MF have also bought shares of the company. DSP’s Vinit Sambre-led team bought 2.4 crore shares of Voda Idea in June while fund managers at Motilal Oswal purchased 2.26 lakh shares.

Fund managers at Edelweiss Financial Services sold 3.35 crore shares of the firm in June, followed by 2.83 crore by Kotak MF, 1.82 crore shares by UTI MF, 97 lakh shares by ICICI Prudential MF, 50 lakh shares by SBI MF and 14 lakh shares by Nippon India MF.

Telecom stocks have underperformed the broader market in the ongoing rally. Bharti Airtel and Jio operator Reliance Industries have gone up just 6 per cent this year, while Voda Idea is down 11 per cent.


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