Vi shares surge 10% in 2 days: What's the reason?
What's the story
Vodafone Idea's shares have witnessed a significant spike, rising by 2.3% to ₹7.23 today. The increase comes after an impressive 7.8% jump on Friday, marking a two-day rally of 10.2%. The surge is largely attributed to reports that the Prime Minister's Office (PMO) is considering a relief package for the financially troubled telecom operator.
Relief measures
Proposed relief package to include moratorium extension and waivers
The proposed relief package from the PMO includes a two-year extension of the moratorium on statutory dues, more flexibility in repayments, lower annual installments, and also possible waivers on penalties and interest. This comes as Vodafone Idea struggles with adjusted gross revenue (AGR) dues of around ₹83,400 crore and annual commitments of about ₹18,000 crore starting March 2025.
Financial woes
Technical indicators show mixed signals
Despite the recent surge, Vodafone Idea's shares continue to face pressure, having fallen 10% in 2023 and over 54% in the last year. Technically, the share is trading above six of its eight key simple moving averages (SMAs), indicating short-term strength. However, it is below its 150-day and 200-day SMAs, indicating longer-term weakness. The Relative Strength Index (RSI) stands at 54.9 while the Moving Average Convergence Divergence (MACD) remains below zero at -0.1 signaling a bearish trend for the stock.
Funding challenges
Vi's financial health remains a concern
Vodafone Idea's precarious financial health has been a major concern. During the firm's June-quarter earnings call on August 18, CEO Akshaya Moondra said they are still exploring alternative funding sources for capital expenditure. He added that the traditional banking channels remain largely closed due to uncertainty over AGR dues. The PMO's decision on the proposed relief framework is seen as crucial for the company's survival in India's competitive telecom market.