Vodafone Idea shares plunged 9% today; stock price targets ahead of Q2 results

Shares of Vodafone Idea Ltd plunged 9 per cent in Monday's trade amid reports the Department of Telecommunications (DoT) issued a notice to the company regarding the non-payment of bank guarantees required to cover past spectrum auction dues. The scrip also fell amid across-the-board selling in the broader market, ahead of the kick start of the September quarter (Q2) earnings season.

As per media reports, the latest notice was issued after the JV between the Vodafone Group and Aditya Birla Group failed to submit bank guarantees on time for past spectrum dues for auctions conducted before 2022. Business Today could not independently verify the reports.

On Monday, Vodafone Idea shares plummeted 9.08 per cent to hit a low of Rs 8.91 on BSE. The telecom scrip has fallen 31 per cent in the past one month and 47 per cent in 2024 so far.

As far as the telecom operator's quarterly earnings are concerned, analysts are largely expecting sales for Vodafone Idea's sales to grow 5 per cent year-on-year (YoY) and see its losses narrowing YoY. A couple of brokerage have Rs 10 as target price for the stock.Kotak Institutional Equities expects Vodafone Idea to report a loss of Rs 6,741 crore. This is against an adjusted loss of Rs 6,432 crore in June quarter and Rs 8,738 crore in the year-ago quarter. Sales are seen rising 5.1 per cent to Rs 11,266 crore against Rs 10,716.30 crore YoY. A couple of brokerage have Rs 10 as target price for the stock.

"We expect revenue growth of 7 per cent QoQ on ARPU uptick led by tariff hikes, partially offset by continued subs decline. Reported Ebitda is likely to increase 10-11 per cent QoQ on higher ARPUs. We model EoP subscriber base to decline by 2 million QoQ (versus -2.5 million QoQ) to 208.1 million and ARPU to increase 9 per cent QoQ to Rs 159 per month on tariff hikes and continuing subscriber mix improvements," Kotak said. The brokerage has a 'Sell' rating on Vodafone Idea and a target price of Rs 10 on the stock.

JM Financial has maintained its 'Sell' on Vodafone Idea with unchanged target price of Rs 10. In our bull case scenario, VIL's fair value could jump to Rs 15 per share assuming: a) sharper tariff hikes driving ARPU to Rs 300 by FY30, it’s able to hold on to its current subscriber base of 21 crore; extension of moratorium and/or partial equity conversion of government dues depending upon VIL’s evolving liquidity position.

This brokerage sees Vodafone Idea's Q2 loss at Rs 6,421 crore. It sees revenue rising 5 per cent YoY to Rs 11,257 crore.

MOFSL is 'Neutral' on Vodafone Idea and suggested a target price of Rs 10. It expects 5 per cent QoQ revenue growth, as the tariff hike benefit could be partly offset by continued subscriber declines. The brokerage expects reported Ebitda to grow 5 per cent QoQ with Ebitda margin expanding 30 bps QoQ to 40.3 per cent.

"ARPU is likely to improve 7 per cent QoQ to Rs 156, while the subscriber base is expected to further decline by 40 lakh. Expect 4G/5G network rollout to start in 2HFY25," it said.

Nuvama sees core loss for Vodafone Idea at Rs 6,394 crore. "We estimate revenue growth of 9.6 per cent QoQ, backed by elevated ARPU. Ebitda margin may expand by 430 bps QoQ. Key monitorables: plans to increase network capacity and arrest subscriber decline," it said.