Vodafone Idea in Friday's early trade jumped to an intra-day high of Rs. 5.45 per share, climbing a whopping 21% as against previous close of Rs. 4.5 on the NSE. The gains defy the higher than expected loss reported by the telecom company for Q3FY20 at Rs. 6439 crore.
The one possible reason for the surge in the stock may be the markets cheering a deep order cut in its loss which in the previous quarter was at its highest at Rs. 50,898 crore. Other positives from Vodafone Idea's earnings include a surge in its revenue for the quarter by 2.3% quarter on quarter, that got a lift from strong growth in 4G segment. Also, its ADR or average daily revenue logged growth after decline in almost 14 quarters, barring Q4FY19.
The ARPU or average revenue per user or ARPU inched a notch higher to Rs. 109 in comparison to Rs. 107 in the previous quarter.
Nonetheless, there remain concerns on the viability of the company's business. The company expressed its concerns saying "material uncertainty exists that cast significant doubt on the Company's ability to continue as a going concern and its ability to generate the cash flow that it needs to settle, or refinance its liabilities including those relating to SC AGR judgement and guarantees as they fall due."
"The Company's ability to continue as a going concern is essentially dependent on a positive outcome of the application for modification of Supplementary Order before the Hon'ble Supreme Court and subsequent agreement with DoT for the payment in installments after some moratorium and other reliefs. Pending the outcome of the above matters, the financial results have been prepared on a Going Concern Basis," it added.
Also, there is lined up Supreme Court hearing for AGR or adjusted gross revenue dues today wherein the honourable Court would hear telecom operators plea that seeks new schedule in respect of AGR payment of Rs. 1.47 lakh crore to the Department of Telecommunications (DoT).
The 3 companies Vodafone Idea, Tata Teleservices and Bharti Airtel through the plea are primarily seeking an extension in timeline for the repayment of AGR related dues.
The stock of Vodafone Idea is among top gainers on the BSE. At 9:52 am, the stock quotes higher at Rs. 5.00 up Rs. 0.50 or 1.11%.