Vodafone Idea‘s share price surged over 8% in early trade. The company disclosed a Rs 5,836 crore settlement-linked inflow from Vodafone Group, and reports of Cabinet relief on AGR dues lifted sentiment. Brokerage firm Emkay Global Financial Services, however, maintained a ‘Sell’ rating with a target price of Rs 6, saying the move in the stock follows payment relief and promoter support, while the company’s financial strain remains, according to its January 1 company update.
What the Cabinet relief actually does
Emkay said the Union Cabinet has approved a five-year interest-free moratorium on Vodafone Idea’s pre-FY18 AGR dues. These dues, amounting to about Rs 87,700 crore, will now be paid between FY32 and FY41. AGR dues linked to FY18 and FY19 will continue to be paid between FY26 and FY31, with no change in the schedule.
The brokerage noted that expectations of a large waiver were not met. Instead of a cut, payments have only been pushed to later years.
Scope for review, but no near-term relief
According to the report, the Department of Telecommunications plans to set up a committee to review AGR dues, including interest and penalties, based on audit findings. Emkay said this process could take 6–8 months. Any reduction from this review is uncertain and not factored into current estimates.
Spectrum dues remain the main pressure point
Emkay said AGR relief does not ease Vodafone Idea’s biggest burden. The company has deferred spectrum payment obligations of about Rs 1.18 lakh crore, with major instalments starting from FY26 and running till FY44.
Including AGR, Vodafone Idea’s total deferred payment obligations stand at roughly Rs 1.94 lakh crore. The report showed that annual payments rise sharply from FY26 and remain elevated for several years.
Earnings fall short of future payouts
Emkay pointed out that Vodafone Idea’s annualised pre-Ind AS EBITDA is around Rs 8,980 crore, which is just 6.7% of its spectrum debt. Cash balance stood at Rs 3,080 crore at the end of Q2FY26.
The brokerage said this level of earnings is not enough to support both future repayments and network spending. Management has guided for FY26 capital spending of Rs 7,500–8,000 crore, which adds to funding pressure.
Debt stays high despite repeated support
Emkay estimated Vodafone Idea’s net debt at over Rs 2.08 lakh crore in FY26. Net debt to EBITDA remains above 10 times, while interest coverage continues to stay weak.
The report added that recent government actions appear focused on keeping the company operational rather than addressing long-term issues around spectrum payments and leverage.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.