Impact of Supreme Court Ruling on Vodafone Idea Stock
Vodafone Idea Shareholders: Shareholders of Vodafone Idea faced significant challenges on September 19, following a crucial ruling by the Supreme Court. The company’s stock experienced intense selling pressure, closing down 19.60 percent at Rs 10.38 on the Bombay Stock Exchange (BSE). The decline is a direct consequence of the Supreme Court’s dismissal of petitions from telecom companies regarding the Adjusted Gross Revenue (AGR) dues. Notably, the stock price has now dipped below its follow-on public offer (FPO) price of ₹ 11, raising concerns among investors.
Investors’ Reaction and Mutual Fund Involvement
The significant decline in Vodafone Idea’s stock price may have prompted investors to reassess their mutual fund holdings associated with the company. Recent reports reveal a high level of activity in mutual funds trading Vodafone Idea shares.
Buying and Selling Trends in Mutual Funds
In August 2024, mutual funds were notably active in trading Vodafone Idea shares. According to data from Trendline, 48 mutual funds purchased shares of the company, while 26 funds opted to sell. This trading dynamic indicates a varied investor sentiment in the wake of the Supreme Court’s judgment.
| Fund Name | Action | Shares Traded (in crores) |
|---|---|---|
| Kotak Equity Arbitrage Fund Growth | Buyer | 2.20 |
| Invesco India Arbitrage Fund Growth | Seller | 4.09 |
| Kotak Equity Savings Fund Regular | Buyer | 1.10 |
| Nippon India Arbitrage Fund Growth | Buyer | 2.03 |
| HDFC Arbitrage Fund Wholesale Plan | Buyer | 1.20 |
Background of the AGR Dues Controversy
The Supreme Court’s ruling stemmed from petitions filed by telecom companies that alleged arithmetical errors in the calculation of AGR dues. Unfortunately for Vodafone Idea, the Court rejected these claims, affirming that the company owes a staggering ₹ 70,300 crore. The ongoing debate centers around the calculation methodology used for AGR, with telecom companies advocating that it be calculated solely on revenue from telecom services. Conversely, the Department of Telecommunications has maintained that AGR must include all income, regardless of source, including revenues from non-telecom activities such as interest on deposits or asset sales.
