Brokerages have reduced the target price of Vodafone Idea. Vodafone Idea has received a major blow from the Supreme Court in the AGR case. The Supreme Court has rejected the curative petition, which demanded recalculation of AGR. This has affected the company. Citi Research and Nuvama have reduced the target price of Vodafone Idea.
Citi Research has lowered the target price to Rs 17 from Rs 22 and maintained a BUY rating. The target price implies an upside of 63%. It said in a brokerage note on Thursday that the dismissal of the petition by the apex court is clearly negative for the company as a discount was expected.
Concerns about Vodafone Idea’s ability to repay its government dues will return once the current moratorium ends in September 2025. Citi Research considers Vodafone Idea a high-risk stock because its balance sheet is in disarray and the company is at the mercy of the government.
Citi Research has lowered its target price because it expects to get a concession from the Indian government. Hence, it is looking at it against its peers which have a better balance sheet. Unlike other brokerages, Goldman Sachs has raised its target price from Rs 2.2 to Rs 2.5.
While the rating is kept on SELL. This shows a downside of 76%. The rejection of the petition by the Supreme Court did not change the estimate of the New York based investment banker as he was not including the discount. He said that from now on Vodafone Idea will increase the tariff repeatedly to generate free cash flow.
At the same time, Nuvama has reduced the target price of Vodafone Idea from Rs 16.5 to Rs 11.5. The brokerage said that Vodafone Idea’s cash flow is not enough to pay the remaining dues. According to it, the impact of a liability of Rs 2.5 lakh crore is visible on Vodafone Idea’s balance sheet.
Out of the total liability, Rs 2.1 lakh crore is for spectrum and AGR liability. Once the moratorium is lifted by the Government of India, the telecommunication company will have to pay Rs 29,000 crore by March 2026 and Rs 43,000 crore by March 2027.
Nuwama said that Vodafone Idea’s subscribers are continuing to decline after not getting any exemption from the government. After the recent tariff hike, Vodafone Idea’s market share has started going to BSNL. There is very limited visibility for the launch of 5G. Therefore, it will be difficult for it to get new subscribers.
Nomura expects Vodafone Idea to go for the option to convert debt into equity. The telecommunication company will convert Rs 12,000 crore of dues into equity. The broker has set a target price of Rs 15. The rating of the stock has been upgraded to BUY.
At 11.45 am, the company’s stock is trading at Rs 10.43 with a decline of 0.10%. Intraday, it has seen a decline of more than 4%.
The stock has declined 7.82% in the last 12 months. Total traded volume on NSE so far in the day is 0.44 times its 30-day average. The relative strength index is 17.58, which shows that the stock is oversold. Out of 22 analysts tracking the company, five have BUY, three have HOLD and 14 have SELL rating.
