Bharti Airtel shares slip 4% on fund-raising plans; here’s why
NEW DELHI: Markets reacted negatively to the fund-raising plan of Bharti AirtelNSE -2.96 % as the shares of the company fell over 4 per cent in early trade on Friday.
Shares of Bharti Airtel cracked a day after the telecom heavyweight announced that its board approved plans to raise as much as Rs 32,000 crore ($4.5 billion) through equity and bond sales in one of the largest such exercises by an Indian company.
Of this, Rs 25,000 crore will be raised by way of a rights issue and another Rs 7,000 crore will be mobilised through foreign currency perpetual bonds.
However, investors are viewing the company’s fund-raising plan from a different angle. The raised fund will help company pare its debt, but is not enough for its capex plans. Also, the discount given for the right issue will hit the company’s earnings per share.
The rights issue price of Rs 220 was at 31 per cent discount to Thursday’s closing price of Rs 317.95 for the stock.
“The raised fund will help company pare its debt, but is not enough for its capex and opex plans. Also, the deep discount given for the right issue will hit the company’s investors view for further fund-raising and increase worry on EPS estimates,” said Sameer Kalra, founder, Target Investing.
