Vodafone Idea shares: Target prices, key things to watch

Vodafone Idea's tariff hikes, capex acceleration and resultant higher incremental market share will be key to its stock performance going ahead. For now, brokerages largely have price targets in the range of Rs 13-15 on the stock.

ICICI Securities has tweaked its Ebitda estimates for FY25-27 and maintained its target price of Rs 13 for Vodafone Idea.

The brokearge said it had modest expectations for Vodafone Idea’s Q4FY24 results, as the telecom operator was struggling from funding gap that limited its ability to invest in growth, while competitors were aggressively adding capacity and capability.

VIL has successfully raised Rs 21,500 crore in equity and expects debt funding of Rs 25,000 crore, which ICICI Securities said should help the company invest Rs 50,000-55,000 crore in network for the next three years.

"It believes it can start growing again with fair share of subscriber addition as it plugs 4G coverage gap, and starts adding more data capacity through 4G and 5G expansion," ICICI Securities said.

Nomura India said the 4G network rollout may conclude within 15 months and the 5G rollout should commence in six months. It has upgraded the Vodafone Idea Ltd stock to 'Neutral' on an improving outlook following the conclusion of its fund raise.

"We expect the industry to take a material tariff hike of 15 per cent following the conclusion of the Central elections, which should be a key trigger for the stock, and expect the government to offer some form of relief to the company when payments in FY25 come up," it said.

Motilal Oswal said the capital raise has provided some breather to Vodafone idea as the long-pending capex and continuous subscriber churn have been affecting its operating performance.

"The significant amount of cash required to service debt leaves limited upside opportunities for equity holders, despite the high operating leverage opportunity from any source of ARPU increase. We expect the conversion into equity of unpaid installment post moratorium to start by FY26/FY27," it said.

Vodafone Idea requires three events to play out to survive – capital infusion, liabilities waiver and tariff hikes, said Nuvama.

"We believe VIL is on its way to a ‘going-concern’ now – though still not completely out of the woods. We are tweaking FY25E/26E estimates down by 2 per cent. We continue to value the stock at 11 times FY26E EV/Ebitda, yielding an unchanged target price of Rs 14," Nuvama said.