Meet the buzzing stock of the day: Vodafone Idea

The stock has become a multibagger in just three months.

Vodafone Idea Ltd (VIL), one of the largest telecom sector companies in India, has delivered tremendous returns on investment for its shareholders. The stock has hit a 52-week low of Rs 4.55 in the month of August from where it has now tripled and is trading near the level of Rs 15. This multibagger stock has delivered a return of more than 200% in just three months’ time, which has made the stock trending on Dalal Street.

There have certain drivers for this bullish trend in the stock. The company had announced an increase in the tariffs of its prepaid plans by 20-25% with effect from 25 November 2021. In the last five trading sessions alone, the stock has gone up by 32%. The company said the new tariff hike will start the process of ARPU (average revenue per unit) improvement and help address the financial stress faced by the industry.

Also, according to a PTI report, the Department of Telecom (DoT) has released bank guarantees deposited for the license fee and spectrum usage charges of Rs 2,500 crore for VIL and also for its competitors Bharti Airtel and Reliance Jio. The expectation of such a release has been in the market for quite a while which had made VIL a buzzing stock.

For the quarter ended September, the company had reported a 2.77% increase in its sales to Rs 9,406 crore. However, the company continues to be loss-making since it has a significant interest cost involved. The net loss for the quarter stood at Rs (7,132) crore, while in the previous quarter it had recorded a net loss of Rs (7,319) crore.

The telecom stock was put under a ban for futures and options trading on December 3, 2021. The open interest had crossed the 95% of the market-wide position limit which is why NSE took the respective action.