Vi shares surge 15% in intra-day trade; Q3 ebitda jumps

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Vi shares surge 15% in intra-day trade; Q3 ebitda jumps

Vi shares moved 15 per cent higher on the BSE in Monday s intra-day trade on the back of heavy volumes. The stock of the telecom services operator recorded its sharpest intra-day rally during the year 2022, as it posted its highest intra-day rally.

Vi had gained 13 per cent in intra-day trade on the BSE on December 31, 2021.

At 01: 45 pm, the stock was trading 14 per cent higher at Rs 9.50, compared to a 0.54 per cent rise in the S&P BSE Sensex. Vi surged 17 per cent in the past two trading days. A total of 256 million equity shares have been traded on the NSE and the BSE.

In January-March quarter, Vi's losses decreased by 6.5 per cent to Rs 6,563 crore on a year-on-year YoY basis. Earnings before interest depreciation tax and amortization ebitda increased by 5.4 per cent YoY to Rs 4,649 crore.

On a quarter on quarter, QoQ ebitda increased sharply by 21.8 per cent due to a 20.5 per cent decline in network and operating costs, partly benefitting from lower energy costs, lower number of days and one of the benefits of Rs 150 crore. Margins were up 466 bps QoQ to 43.9 per cent.

The company's average revenue per user ARPU increased to Rs 124, up 7.5 per cent QoQ compared to Rs 115 in Q 3 FY22, aided by tariff hikes in November 2021. It added one million 4 G customers, and that count stood at 118.1 million.

A top official of the firm, PTI, said last week that the debt-ridden telecom operator expects the government to complete the conversion of around 16,100 crore dues into 33 per cent stake in the company in the coming weeks.

Vi CEO Ravinder Takkar believes that the government's reform package and related developments, the return of the bulk of bank guarantees and industry wide tariff hikes and recent fund infusion by the promoters are major catalysts for the company.

The Department of Telecom DoT returned bank guarantees of around 16,000 crore as part of the reforms package. The company allocated equity shares worth Rs 4,500 crore to promoters on March 31, 2022 against their investment of Rs 3,375 crore and Rs 1,125 crore, respectively. The board of the company has approved a raise of 10,000 crore to support the firm's business.

Vi remains the weakest private telco. According to analyst at ICICI Securites, the need for capitalisation is urgent due to the upcoming debt repayment requirement, lagging spends on network and continued market share loss.

Recent government relief measures would ensure the survival of Vi, but the future growth outlook remains uncertain. The brokerage said in its results update that we have our ratings target price UNDER REVIEW until clarity emerges on fund raising.