Vodafone Idea’s share price plunged over 5% on Friday, hitting a 52-week low of Rs 9.79 per share on the NSE. This decline marks a continuation of its recent losses, as the stock has fallen more than 24% in just two days.
The sharp downturn follows the Supreme Court of India’s decision in the Adjusted Gross Revenue (AGR) case, which poses a significant challenge for the debt-laden telecom company.
Supreme Court Ruling
On Thursday, the Supreme Court upheld its previous decision regarding the AGR, declining to hear curative petitions filed by Vodafone Idea and other telecom companies. These petitions sought relief from the court’s 2019 ruling, which included non-telecom revenue in the AGR calculation for licensing fees and spectrum usage charges owed to the government.
Nomura on Vodafone Idea
Following the Supreme Court’s recent ruling, the market has developed a mixed perspective on Vodafone Idea’s stock. Global brokerage firm Nomura has upgraded its rating from neutral to buy, establishing a target price of Rs 15.
Nomura expresses confidence that the most challenging phase for the company is now behind it, particularly with the conclusion of the AGR overhang. The brokerage sees the recent price correction, coupled with a robust industry outlook, as a potential buying opportunity, noting that government support could significantly alleviate Vodafone Idea’s funding challenges.
Nomura has consistently emphasized that three critical events are necessary for Vodafone Idea’s survival: capital infusion, tariff hikes, and a waiver of liabilities. While the first two conditions have been addressed, the prospect of a liabilities waiver now appears increasingly unlikely.
UBS on Vodafone Idea
Conversely, UBS, another foreign brokerage, has provided a range for Vodafone Idea’s fair value per share, estimating it could be between Rs 12 (without relief on AGR) and Rs 24 (with full AGR relief). Currently, the stock trades just below this implied fair value. UBS acknowledges the potential for equity conversion or deferral measures but emphasizes that the impact on equity holders remains uncertain.
Technical Outlook
Commenting on the technical outlook Anshul Jain, Head of Research, Lakshmishree Investment & Securities said that the stock witnessed a failed breakout at Rs 17 on the monthly chart, from a classic “cup and handle” pattern. Since then, heavy long liquidation has ensued, with significant volumes driving prices lower. In this process, the stock broke below a key support level of Rs 11.50, signaling further weakness.
Jain also added that the next logical target is Rs 5.50, a critical low on the monthly chart. Investors are now watching closely as this level holds the potential to either act as strong support or signal a deeper correction. The ongoing price action underscores the importance of technical analysis in understanding market trends.
Vodafone Idea Share Reaction in Last one year
The shares of Vodafone Idea have demonstrated negative returns across various time intervals. In the last month, the stock delivered a negative return of 35.26%. Over the past six months, it exhibited a significant decline, with negative returns of 19.06%, indicating a strong downtrend.
Year-to-date figures further emphasize the stock’s bearish trend, recording negative returns of 35.50%. Looking at the broader horizon, the shares have shown consistent weakness, with negative returns of 6.18% over the last year.
(Disclaimer: Views, recommendations, and opinions expressed are personal and do not reflect the official position or policy of Financial Express.com. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)