Here's Why Vodafone Idea Share Price Is Surging In Trade Today

After facing immense pressure in trade on Wednesday, shares of Vodafone Idea has rebounded on Thursday, on the back of a positive development after market close.

After reaching an intraday high of Rs 11.20, the stock is currently trading at Rs 11.17, accounting for gains of almost 4%. This compares to Wednesday's closing price of Rs 10.76.

This comes against the backdrop of widespread media reports that claimed the Cabinet has given Vodafone Idea a fresh relief, in the form of a five-year interest-free moratorium on its AGR-linked dues of over Rs 87,000 crore.

Although Vodafone Idea, after market close on Wednesday, confirmed that the company has not received any communication from the government surrounding the supposed relief, NDTV Profit can confirm the Cabinet has given the cash-strapped telecom company a moratorium that will ensure Vi's AGR-linked dues won't accrue any interest until FY32.

This expected relief was far below street expecations, which led to the stock facing pressure in trade on Wednesday. However, sources have told NDTV Profit that the Department of Telecommunications is likely to form a committee to look into reassessment of AGR dues, in about six to eight months.

Another factor that might be driving the stock higher in trade on Thursday is the development overnight, which will see Vodafone receive Rs 5,836 crore from promoter Vodafone PLC.

The British telecom company confirmed it will release Rs 2,307 crore to Vodafone Idea over the next 12 months.

Vodafone PLC has also set aside its 328 crore shares held in Vodafone Idea for the benefit of the latter.

Vodafone Idea will have the right to instruct Vodafone Plc to sell these shares in one or more tranches, and any cash proceeds from stake sale being transferred to Vodafone Idea.

As of today, the market value of these shares is close to Rs 3,529 crore.

Shares of Vodafone Idea, which has given investors a 12-month return of 40, is currently trading with a relative strength index of 43, suggesting neutral market sentiment.

Out of 22 analysts tracking the company, five maintain a 'buy' rating on VIL stock, seven recommend a 'hold,' and ten suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target is Rs 8.96.