Vodafone Idea share price surged over 6% in today’s trading session, hitting an intraday high of Rs 8.99 per share. This rally comes despite reports that the telecom operator has been asked by the Department of Telecommunications (DoT) to provide a Rs 6,090 crore bank guarantee by March 10. However brokerages are cautious on the stock at the moment.
Motilal Oswal on Vodafone idea: Financial strain a worry
According to brokerage firm Motilal Oswal, Vodafone Idea’s EBITDA grew 4% QoQ, in line with estimates, due to the lower employee and SG&A costs.
The brokerage in its report noted that Vodafone Idea continued to lose market share, particularly in data subscribers and overall customer engagement, while Bharti Airtel emerged as the biggest gainer.
“Further, with GoI prepayments commencing from 1HFY26 and no breakthrough on debt raise, we believe Vi is likely to face a cash shortfall and may not be able to meet the capex guidance of INR500-550b by FY27,” Motilal Oswal added.
Given the financial strain and lack of a debt raising breakthrough, the brokerage has downgraded Vodafone Idea to a “Sell” rating from “Neutral,” revising its target price to Rs 5 per share.
Nuvama on Vodafone Idea: Cautious stance
According to the brokerage firm, Vodafone Idea’s revenue increased 1.7% QoQ and 4.2% YoY to Rs 111.2 billion, slightly below market estimates of Rs 113.5 billion. The brokerage has maintained a ‘Hold’ rating on the stock, revising its target price to Rs 8.5 per share from Rs 7 per share.
“Vodafone Idea today is definitely in a better position than it was six months ago. DoT waiver of bank guarantee requirements is a positive development, but a lot needs to fall into place for VIL to become an investible idea for us,” the brokerage said in its report.
Vodafone Idea ARPU growth and subscriber loss
Vodafone Idea ARPU posted a 4.5% QoQ and 12.4% YoY growth, reaching Rs 163. As per the brokerage report, this increase was due to the residual impact of tariff hikes.
The 4G subscriber base remained almost unchanged, rising by just 0.1 million to 126 million. The brokerage further in its report highlighted the subscriber loss to users using dual SIMs, market share shifts to BSNL, and weak network coverage in certain areas.
Vodafone Idea financial strain and debt concerns
Vodafone Idea’s financials also remain under pressure despite some operational improvements.
According to the brokerage, despite the recent improvements, the company still faces certain challenges. The company’s ability to stabilise subscriber losses, implement further tariff hikes, and accelerate its capex plans will be closely watched by investors.
“Investor focus shall now shift to VIL’s progress on key operational parameters—pace of subscriber loss, future tariff hike(s), and capex velocity – even as further developments on AGR dues shall also be keenly watched,” added the brokerage in its report.
For now, Nuvama maintains a cautious stance, reiterating its ‘Hold’ rating on the stock.
Vodafone Idea stock performance
Vodafone Idea’s share price has seen a sharp decline over time. In the past five days, the share price of Vodafone Idea dropped by 5%. Looking at a broader period, the share price has fallen over 42% over the last six months and 40% over the past year.
The company’s 52-week high stands at Rs 19.18 and a low at Rs 6.61. The company’s market capitalisation currently stands at Rs 62,900 crore.