Vodafone Idea, Indus Towers shares skyrocket on govt's stake move

Stake issuance coupled with potential capital infusion by promoters should help Vi clear pending dues and invest in 5G; Indus Towers' receivables set to reduce

Stocks of Vodafone Idea (Vi) and Indus Towers rallied on Monday on the back of the central government's decision to take a 33 per cent stake in Vi.

Shares of Vi surged nearly 20 per cent to close at Rs 8.26 on the BSE, while Indus Tower stock rose nearly 13 per cent to Rs 162.

On Friday, the government finally approved the conversion of interest worth over Rs 16,000 crore into equity in Vi. The board of Vi had approved the proposal last January but it was stuck for the past several months.

Analysts view the development as a near-term positive for Vi. The stake issuance coupled with potential capital infusion by promoters should help the company clear pending dues and invest in the 5G network. On Monday, Vi also announced a tie up with device maker Motorola to ensure seamless 5G connectivity across its fifth generation smartphone portfolio.

The development is also considered a positive for Indus Towers as it will improve visibility of cash flow and reduce its receivables.