The share price of Vodafone-Idea (Vi) continued to lose ground for the third straight session on Thursday, falling nearly 15 percent in the opening trade. The stock hit a fresh 52-week low to Rs 4.55 per share.
The decline in the share price continued as Kumar Mangalam Birla stepped down as the Non-Executive Chairman and Director of the board of Vodafone-Idea Limited on Wednesday.
"The Board of Directors of Vodafone-Idea Limited, at its meeting held today (Thursday), have accepted the request of Mr Kumar Mangalam Birla to step down as the Non-Executive Director and Non-Executive Chairman of the Board with effect from close of business hours on August 4, 2021," the telecom major said in an exchange release.
The board has elected Himanshu Kapania as the Non-Executive Chairman and Sushil Agarwal as Non-Executive, Non-Independent Director, with effect from August 4. Kapania served as a Non-Executive Director to the board earlier, while Agarwal was a nominee of Aditya Birla Group.
The developments come at a time when Vodafone-Idea is struggling to stay afloat. The telco has been trying to raise Rs 25,000 crore to sustain its operations and pay governmental and regulatory dues.
This struggle for survival took a turn for the worse when the Supreme Court dismissed its plea for recalculation of the adjusted gross revenue due to alleged arithmetic errors.
Subsequently, Birla offered his stake in Vi to a government entity. He said, in a letter to Cabinet Secretary Rajiv Gauba, that with a "sense of duty" towards the 27 crore Indians who are connected with Vi, he is willing to hand over his stake to any government entity.
Nick Read, CEO of Vodafone Group Plc, has also ruled out liquidity infusion in the struggling Indian telco.
Its liquidity position is poor with "Rs 70 billion of debt maturing in FY22, and AGR due payments likely from next year", Nomura said. Vi also has a negative net worth, it said, adding that it could be a potential risk to higher non-performing loans (NPLs) for the sector and select banks.
'A minor hiccup'
IDFC First Bank and Yes Bank have the highest exposure to Vi in terms of materiality -- Rs 3,240 crore, 2.90 percent of the book and Rs 4,000 crore, 2.40 percent of the book. SBI has Rs 11,000 crore exposure to the telco.
Following a 15 percent drop in the Vi stock on Wednesday, banks like IndusInd Bank, IDFC First Bank witnessed a sharp drop in their stock prices as well. While IndusInd Bank dropped from day's high, IDFC First Bank dropped nearly three percent to trade at Rs 50.30.
On Thursday, IndusInd Bank was trading 2.15 percent lower at Rs 998. IDFC First Bank was trading over 5 percent lower at Rs 47. Yes Bank was down nearly 2 percent at Rs 12.39.
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However, Nomura pointed that Vi is marked as 'below investment grade' across banks and that its risk exposure has been on investors' minds for the past two years now.
"It is not a new problem," Nomura mentioned, as a result, it believes "in case of an eventual default, stocks may not have much material downside".
First Published: IST