Mid-cap stock below Rs 15: Fund managers purchased 15,97,24,433 shares; Tata and Parag Parikh fund schemes doubled their stakes!

As the stock posted an impressive 86 per cent gain on a year-to-date basis and traded below Rs 15, the question echoed in the investment community

In the tumultuous landscape of the Indian stock markets on the final trading session of the CY 2023, where the Nifty and Sensex were grappling with marginal losses, there emerged a stock that not only defied the odds but soared high amidst adversity. Vodafone Idea Ltd (VIL), a company entrenched in a partnership between the Aditya Birla Group (ABG) and Vodafone Group Plc (VGP), became the unlikely hero of the trading floor.

The year 2023 was a roller coaster for VIL, marked by highs and lows that mirrored its own corporate challenges. With the dark cloud of fundraising plans casting a shadow on its growth prospects and a relentless decline in subscriber numbers over nine consecutive months, VIL seemed to be navigating through stormy waters. It lost a staggering 7.5 lakh mobile customers in September alone, bringing its user tally down to 22.75 crores.

However, in a surprising turn of events on the last trading session of the year, VIL was not only holding its ground but thriving. The stock witnessed a remarkable jump of 12 per cent, and the trading volume soared to a staggering 62 crore shares on the National Stock Exchange (NSE). Investors and market watchers were left intrigued by this sudden surge.

VIL's ownership structure revealed a complex web of stakeholders, with VGP owning 32.29 per cent, ABG holding 18.07 per cent, and the Government of India maintaining a 33.14 per cent stake as of June 30, 2023. The company, with its pan-India operations, stood as one of the largest telecom operators, offering a gamut of services across 22 service areas.

In November 2023, the stock gained favor among fund managers, who collectively bought a net quantity of 15,97,24,433 shares, amounting to an approximate value of Rs 198.86 crore. Baroda BNP Paribas Arbitrage Regular Growth Fund led the charge with a staggering 933.33 per cent month-on-month increase in their holding, while Tata Arbitrage Fund and Parag Parikh Arbitrage Fund saw their holdings surge by 123.42 per cent and 100 per cent, respectively.

VIL's ambitious plans for fundraising to support 4G expansion and the rollout of 5G services hit a roadblock, causing delays beyond the envisaged timelines. Despite challenges, the company initiated the rollout of 5G services, albeit with limited coverage compared to competitors. The ability to secure funds for further expansion remained a crucial factor affecting the company's competitive edge.

Notably, VIL managed to navigate its financial obligations, repaying bulky dues in Q2FY24 towards 5G spectrum installment and bank debt through short-term loans. The deferment of operational creditors' repayment obligation provided a temporary breather. The commitment from a promoter group entity to provide financial support to the tune of Rs 2,000 crore added a layer of reassurance.

As the stock posted an impressive 86 per cent gain on a year-to-date basis and traded below Rs 15, the question echoed in the investment community: Do you hold this stock in your portfolio? The comment section became a battleground of opinions and strategies, reflecting the diverse and dynamic nature of the stock market, where even the underdogs have the potential to become stars.

Disclaimer: The article is for informational purposes only and not investment advice.