Stock analysts are mixed on Vodafone Idea Ltd after the telecom operator’s less-than-expected December quarter results. Nomura India still sees 37 per cent upside on the counter, while MOFSL downgraded the stock to ‘Sell’ and sees it falling to Rs 5 level. Kotak Institutional Equities also has a ‘Sell’ recommendation and a fair value target of Rs 7 on the stock. ICICI Securities, with ‘Hold’ rating, cut its FY25–27 Ebitda estimates by 6-10 per cent but raised its target price on VIL to Rs 8 from Rs 7earlier, saying securing debt funding and AGR resolution are key events to watch out.
Explaining this, Nomura India said the outlook for VIL remains hinged on VIL closing its debt raise soon, which is critically essential for VIL to be able to invest in networks and return to a modest subscriber growth path. It retained its ‘Buy rating’ with a revised target of Rs 12 (INR14 earlier) on lower estimates.
“With GoI prepayments commencing from 1HFY26 and no break-through on debt raise, we believe VIL is likely to face a cash shortfall and may not be able to meet the capex guidance of Rs 50,000-55,000 crore by FY27. We cut our FY26-27 Ebitda by 7-8 per cent on lower subscriber and ARPU assumptions. We downgrade VIL to Sell (from Neutral) with a revised target of Rs 5, based on DCF implied 14 times FY27E EV/Ebitda.
Vodafone Idea shares were trading 3.92 per cent higher at Rs 8.74 on BSE. The Rs 12 target suggests a potential 37 per cent upside but the Rs 5 target suggests 43 per cent downside on the counter.
The Vodafone Idea management indicated that the next tariff hike is likely to follow a 9-12 month cycle, i.e. likely before June 2025. The impact of subscriber loss to BSNL has completely reversed with net port-ins from BSNL now positive and rising. VIL has also recorded positive VLR subscribers adds in 11 circles over December 2024-January 2025.
Vodafone Idea noted that relief measures by the government allow for equity conversion of entire upcoming dues and not just the deferred portion of dues, i.e., conversion of dues can potentially be Rs 29,000 crore in FY26 and Rs 43,000 crore in FY27. It suggested that the 5G launch will commence from March 2025 in Mumbai, followed by Delhi, Bangalore, Chandigarh and Patna in April 2025.
Debt raise has been facing some delays as banks are seeking clarity on the resolution of AGR dues by the government, Nomura India reported Vodafone Idea as saying.
“We cut FY25-27 Ebitda by 2-3 per cent on factoring modestly lower subscribers/ARPU; we factor in 13 per cent growth of ARPU for FY26-27F, with ARPUs rising from Rs 158 in FY25F to Rs 179 in FY26 and Rs 202 in FY27. We expect the pace of subscriber loss to decline in FY26F and VIL to return to modest growth for subscribers in FY27F, driven by investments for expanding 4G population coverage and 5G roll out,” it said.
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