Mumbai: The Indian unit of Vodafone Group Plc, which is preparing for an initial public offering (IPO), has been valued up to $15.8 billion by international brokerages in recent weeks. This could fetch billionaire investor Ajay Piramal's 5.5% stake around $870 million giving him 36% return within 24 months. 

The recent reports from global analysts estimated Vodafone's valuation between $14-16 billion. On Thursday, Piramal said he expected a reasonable 17-20-% return pegging it in sync with the more conservative estimates in London's financial district. He acquired minority stake for $640 million valuing Vodafone's local arm at $11.6 billion one day earlier. 

Piramal, 57, may recoup a maximum of $900 million if he sells the stake back to Vodafone in the event of IPO being shelved, said a source who did not wish to be named. At this price, Vodafone India's valuation will be around $16.3 billion. 

Piramal's entry came weeks after Citigroup analysts estimated valuation of Vodafone Essar—which is being renamed after Ruias of Essar exited—at $14.2 billion. In June, Bernstein Research, a pedigree Wall Street firm, said the Indian operations of the telecom giant could fetch $15.8 billion. The most conservative figure tumbled out of BNP Paribas which pegged the valuation at $13.9 billion, while that of Deutsche Bank analysts was on the higher side, at $15.1 billion. A Vodafone Group Plc spokesperson declined to comment on valuations. 

The troubles plaguing India's telecom sector—from hyper competitive tariffs to regulatory uncertainty—saw Vodafone India's equity valuation dropping from $19 billion when the global giant acquired Hutchison's majority interest four years ago. It fell to $16.5 billion as Vodafone bought out erstwhile partner Essar's 33% interest earlier this year. So Vodafone had suffered 38% decline in equity value when Piramal entered India's second largest mobile telephony company (by revenue) this week. 

This appears to be a steep fall when compared to Vodafone's listed local peers—Bharti Airtel and Idea Cellular-—both of which saw market capitalization drop only in single digits during the same time frame. Bharti Airtel's current m-cap of $33 billion was about 4% lower than what it had in 2007. The drop was closer to 9% for Idea Cellular. "Bharti has much bigger revenue, faster growth and probably a bigger brand from the India perspective," said Jagannathan Thunuguntla, head of research, SMC Global.