PSU stocks surge as the SC asks DoT to review the AGR

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The shares of leading telecom players such as Vodafone Idea and Bharti Airtel slumped up to 13% while those of public sector undertakings (PSUs) such as Power Grid Corporation of India, Oil India, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) saw a sudden spike of shares as the supreme court’s observations on the adjusted gross revenue (AGR) issue came out.

Vodafone Idea’s shares dropped 13% to Rs 9.39, declining 18% from its intra-day high of Rs 11.44 on the BSE on massive extents. The trading volumes surged nearly two times, with a combined 2,445 million equity shares changing hands on the NSE and BSE. Bharti Airtel, on the other hand, was down 3% at Rs 552, after hitting a high of Rs 574 on the BSE following the supreme court order. The S&P BSE Telecom index, the top loser among sectoral indices, as it lost 4% at 1,270 points, while the benchmark S&P BSE Sensex was closed 709 points, or 2%, lower at 33,538 levels.

PSUs that earned

The shares of certain public sector undertaking companies such as Gujarat Narmada Valley Fertilizers & Chemicals, Oil India and Gail India were up between 5% and 6% on the BSE in the intra-day trade after the supreme court asked the department of telecommunications (DoT) to reconsider its demands for adjusted gross revenue AGR dues from the PSUs. Gail India closed at nearly 3% lower at Rs 95.50, while the remaining three stocks settled fairly for the day. These PSUs had been compelled to pay their license fee and spectrum usage charges, not only on revenue related to telecom but on total revenues as per the October 24 Supreme Court order. The Supreme Court directed the department of telecommunication to reconsider demands raised against the PSUs and stated, “Have questioned the DoT on how demand against PSUs had been raised when our judgment never even dealt with PSUs.”

On May 18, the court had questioned Bharti Airtel, Vodafone Idea, and other telecom operators for self-assessing their outstanding telecom dues, saying they need to pay past dues with interest and penalty, an estimated amount of Rs 1.6 lakh crore. The telecom companies have been ordered by the court to file affidavits regarding payment plans, the time required, and securities. The court has scheduled to hear the AGR case again on 18th June, 2020.