Vodafone Idea shares at Rs 22? Citi says SC move on AGR petition a material development

Foreign brokerage Citi has reportedly maintained its 'Buy' rating on Vodafone Idea Ltd with a target price of Rs 22, saying the Supreme Court has finally agreed to hear the telecom operator's AGR curative petition. Citi said it sees the SC's move as a material development as the matter has been long pending.

A favourable outcome could significantly reduce the telecom operator's AGR debt burden, Citi reportedly said. Potential benefits are estimated at Rs 4-5 per share or even higher -- over 25 per cent benefit to the prevailing stock price.

Vodafone Idea shares are down 6 per cent in 2024 so far. Yet, they are up 79 per cent for the past one year. The scrip closed at Rs 15.96 apiece on Wednesday, down 0,25 per cent.

Citi said its prevailing target price of Rs 22 does not factor in any reduction in the company's AGR dues, adding that the developments with Vodafone Idea could also benefit Indus Towers. Any such relief would be positive for Bharti Airtel too, but its salience would be far more limited, CNBC-TV18 reported it as saying.

In an earlier report, the foreign brokerage said a discernible shift in stance by market leader Reliance Jio towards monetisation, ease in competitive intensity and the recent tariff hikes that have been at the higher end of consensus estimates are all positives. Moves by Reliance Jio & Bharti to monetise 5G are a clear positive, it added.

Citi earlier said investors would focus on completion of VIL's debt raise as discussions with banks are already ongoing. A potential equity infusion into Vodafone Idea (up to Rs 2,000 crore ballpark) once the balance 3 per cent stake (out of 21 per cent previously held) in Indus Towers is sold by its UK promoter will be keenly watched, as Citi felt it could be used by Vodafone Idea to partly clear its past dues to Indus Towers.