Rising fears that one of the finest telecom companies to emerge from the country over the past two decades could be on its way to a financial meltdown was cheered by the investors of its rivals. Vodafone Idea’s initial 25 per cent slump saw investors flock to shares of rivals Bharti Airtel and Reliance Industries.
Bharti Airtel, in particular, surged nearly 8 per cent, within the touching distance of its record high as investors believe that the company will stand to benefit the most in a duopoly industry with Reliance Jio. Analysts had previously suggested that most of Vodafone Idea’s customers could move to Bharti Airtel, which could boost the company’s revenue and subscriber market share.
In addition to the assumed benefit from Vodafone Idea’s collapse, investors were buoyed by the strong upgrades to price target by some brokerage houses following the company’s June quarter earnings.
Brokerage firm Motilal Oswal Financial Services already expects a 25 per cent bump in Bharti Airtel’s stock price in the next 12 months even as it has not yet accounted for any tariff hikes and market share gains from Vi’s fall.
The optimism could, of course, go down the drain if the government decides to wear its superhero cape and save the damsel, but nobody will count on it, not even Vodafone Idea.
Banks keep Voda company
While at least Vodafone Idea’s lenders ensured that the telecom operator did not suffer alone even if they did not do it voluntarily.
Shares of lenders to the telecom companies such as IDFC First Bank, YES Bank,
, IndusInd Bank, and a few others tumbled in today’s trade on fears that bankruptcy for Vodafone Idea could result in hefty provisioning for them. The Nifty Bank index ended 0.5 per cent lower, while the Nifty PSU Bank index slumped over 2 per cent.
ITC, is that you?
Moving away from the Vodafone Idea story, investors of ITC were left perplexed by what was happening at the stock’s counter.
Shares of the tobacco-to-hotel company have risen 5 per cent in this week so far, helped by a more than 3 per cent move today itself (Yes, we are as surprised as you are). A stock that took more than two months to move even 2 per cent higher, has now achieved the same feat twice in the space of mere 10 days.
ETMarkets.comFundamental analysts will point to the reopening of the economy and the benefits that brings for the company’s cigarette and hotel business. Further, the stock is also benefitting from a larger rotation of funds from midcaps and smallcaps to underperforming largecap stocks this week. Whatever be the case, we are happy for the ITC shareholder. They deserve happiness too.
