The international brokerage UBS has increased its rating for Vodafone Idea Ltd (VIL) from "Neutral" to "Buy," with a revised target price of Rs. 18 as opposed to Rs. 13.10 previously. According to UBS, which projects a 70–80% VIL rally in the near future, there is a good chance that the government would impose a moratorium or reduce the AGR, especially considering that its declared goal is to maintain three independent private telecoms.
Currently, a 50% chance of an AGR dues waiver underpins UBS' target price of Rs 18 for Vodafone Idea. Although additional relief options like postponement, equitization, or cancellation of spectrum due are also feasible, UBS regards such as less plausible, hence it does not factor them into its basic price target calculations.
"Although the stock is trading at a comparable c1 1 times FY26e EV/Ebitda to Jio and Airtel, VIL is the most leveraged to any such relief." We upgrade to Buy because we think the risk-reward is favorable prior to any such disclosure," the statement read.
According to UBS, as the Vodafone Idea follow-on public offer (FPO) draws to an end and Bharti Airtel Ltd. and Reliance aim to prioritize return on invested capital (ROIC) above market share gains, the stock market is pricing in a 15-20% increase in mobile prices over the next 12 to 24 months. Ut kept its ratings of Bharti Airtel and Indus Towers at "Neutral."
"Starting in FY26, VIL will pay the government an annual total of nearly $5 billion, which includes $2 billion for AGR and $3 billion for spectrum. Considering the specifics of the curative petition that the telcos filed in the AGR case, we think that between 50 and 75 percent of the AGR dues may be waived for VIL. Our DCF value might rise to Rs 24 per share if all AGR dues are forgiven, as opposed to Rs 12 in the absence of exemptions," it said.
Meanwhile, UBS raised their target price for Indus Towers materially. It boosted the target price for Indus Towers from Rs 220 to Rs 355 in order to account for the settlement of past due amounts from VIL and increasing demand from a better financed VIL.
We have incorporated three viable private telcos into the Indian telecom industry, thus we have adjusted our projections for Indus in a few other ways as well. Assuming that the majority of the VIL receivables are settled, we now project that the tenancy ratio will grow from 1.68x in FY24 to 1.70x in FY28, bringing our DCF value to Rs 355 per share. Nevertheless, we remain neutral," it stated.
