Idea Cellular rings a good tune

Idea Cellular is the top gainer on the BSE currently. It rose 13% to Rs.118, tantalizingly close to its 52-week high at Rs.123.75.

The market has given a clear thumbs up to the company’s plan for raising funds.

Yesterday, the company’s Board approved issue of around 33 crore equity shares on a preferential basis to promoter group entities. These shares are being issued at a price of Rs.99.50/share.

The promoter entity refers to Birla TMT Holdings Private Limited, Elaine Investments Pte (Singapore), Oriana Investments Pte (Singapore) and Surya Kiran Investments Pte (Singapore).

Post this, promoter holding will go up from current 42.4% to 47.2%.

This is expected to bring in funds to the tune of Rs.3250 crore and it is also looking at other fund raising options to the tune of Rs.3500 crore – either through one more preferential issue, QIP or even a rights issue.

The merger with Vodafone has necessitated this fund raising and is a good move as it will provide liquidity and bring down some of the debt while showing the commitment of the promoters.