Bharti Airtel to raise Rs. 32,000 crore

The board of Bharti Airtel approved the fundraising proposal to raise upto Rs. 32,000 crore through rights issuance and perpetual bond. This development seems to have given rise to negative investor sentiments and the stock dipped close to 4 per cent.

The company plans to raise Rs. 32,000 crore, of which Rs. 25,000 crore will be through rights issuance and another Rs. 7,000 crore (US$1 billion) through perpetual bond denominated in foreign currency with equity credit. The price of the rights issue was fixed at Rs. 220 per equity share, which is at a discount to its market price and rights ratio is set at 19 shares for every 67 shares held as on the record date. 

Market seems to be spooked by the fact that these funds will only help the company reduce its existing debt and will not suffice its high capex and opex requirements to compete with rival Reliance Jio. 

On Friday, the stock of Bharti Airtel closed at Rs. 307.05 per share, down by Rs. 10.90 or 3.43 per cent, while the benchmark index BSE Sensex closed at 36,063.81, up by 196.37 points or 0.55 per cent. On 1-year return basis, the stock has underperformed the Sensex by 33.97 per cent.