Analyst expectations for Vodafone Idea Ltd (VIL)'s Q4 earnings were somewhat missing. According to analysts, the telecom operator is now in a stronger position than it was before the FPO and is following a clear route to survival—something that was entirely absent previously. However, several conditions must be met before it can be considered a viable proposition, they added, noting that VIL must immediately incur capital expenditures for the deployment of 5G as well as for the upgrading and expansion of its 4G network. They suggested a 'Neutral' or 'Hold' rating on the company, with target prices in the Rs 14–15 area, and stated that the infrastructure upgrade will take six to eight quarters to complete.
On Friday, Vodafone Idea's stock closed at Rs 13.33, up 1.37 percent. The objectives indicate a possible upside of up to 13%.
Nomura India upgraded the shares to "Neutral" and changed its target price to Rs. 15 and stated that VIL is prepared for clear skies ahead.
Although there is still a long way to go, the storm has mostly passed, and VIL is preparing for calm skies ahead. We roll forward our valuation to Mar-26F with an EV/Ebitda multiple of 15 times, and we upgrade the company to Neutral (from Reduce) with a revised target price of Rs 15 (from Rs 6.50), the statement stated.
According to Nuvama, for VIL to thrive, three things must happen: tariff increases, liability waivers, and capital infusion. It claimed that the fund campaign had accomplished one goal and made another possible.
While it's still not quite out of the woods, we think VIL is moving toward a "going-concern" at this point. We are adjusting the FY25E and FY26E projections by 2%. Nuvama stated, "We maintain our valuation of the stock at 11 times FY26E EV/Ebitda, which results in an unaltered target price of Rs 14."
The telecom provider is now seeing a halt in the loss of subscribers, which suggests that dual sim card consolidation is still far behind. According to analysts, poor network coverage in outlying locations and users switching to 4G/5G mobile phones are to blame for the client loss.
"Limited network investments led to subscriber attrition by slowing down the user experience. Network investment improvements might take two to three years. The business hopes to increase the number of data subscribers and limit subscriber attrition with this, according to Motilal Oswal Securities.
Over the next three years, Vodafone Idea plans to invest between Rs 500 and Rs 550 crore in the highly consequential areas of 4G coverage extension, 5G debut, and capacity development. It still owes Rs 2.1 lakh crore and will start making payments of Rs 43,000 a year in FY26.
"This is difficult in comparison to the FY24 annualized EBITda of Rs 84,000 crore (IND-AS 116). Even while operating leverage from any type of ARPU rise is large, the substantial amount of cash needed to pay debt offers little options for equity investors to benefit.By FY26/FY27, we anticipate that the outstanding payment post-moratorium will begin to be converted into equity, according to Motilal Oswal.
A tariff hike has been factored into this brokerage's projections, resulting in a 16 percent increase in ARPU and an 18 percent to 27 percent CAGR in revenue and EBITDA during FY24–26.
"With a net debt of Rs 2.1 lakh crore and an assumed 14 times EV/Ebitda, the target price is Rs 15. The stock may continue to be influenced by the decrease of AGR liability, the limitation of subscriber churn, and the possibility of a tariff rise. We continue to evaluate the stock as Neutral," the statement read.
