“In our bull case, we assume a sharper 10% 10-year ARPU CAGR (versus our base case estimate of ~8.5%). In this case, our FV for Vi could potentially increase to Rs23/share. However, several things (such as AGR waiver, moderation in competitive intensity from peers and sharper tariff hikes) have to fall in place for this outcome,” said Aditya Bansal of Kotak Equities.
Vodafone Idea shares were trading 1.5% higher today at Rs 13.38 on BSE. The stock is in focus today as the debt-ridden telco, which recently concluded its Rs 18,000 crore FPO, is set to announce its March quarter results later in the day.
In the base scenario, assuming the status quo (3+1 market construct) to continue beyond FY2026, with the government allowing some reliefs (deferral, waiver or conversion of spectrum and AGR dues) to ensure Vodafone’s survival, Kotak has a target of Rs 10 on the stock.
“Vi’s fund-raise ensures the continuation of 3+1 market construct in the medium term. With easy subscriber gains (from Vi) unlikely, we believe telcos’ focus could shift from land grab to generating adequate returns through tariff hikes,” Kotak said, adding that the long-term revival still hinges on the government’s relief measures, moderation in competitive intensity and Vi’s execution to avert further subscriber losses.”We await signs of Vi’s subscriber base stabilization and greater clarity on potential GoI relief measures/dilution, before turning more constructive,” the brokerage said.In Q4, Vi’s net loss is expected to be in the range of Rs 7,307.20 crore to Rs 7,680 crore while revenue for the quarter is expected to be around Rs 10,690 crore.
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