2 weeks Ago
Brokerage firm JPMorgan has upgraded shares of telecom services provider Vodafone Idea Ltd. to "neutral" from its earlier rating of "underweight." NSE It has also raised its price target on Vodafone Idea to ₹10 from the earlier target of ₹7.
However, even the revised price target remains below the company's FPO price of ₹11. The brokerage wrote in its note that the lack of AGR relief and affordability means that there is an increased likelihood of sustained tariff repair within the telecom space. JPMorgan is projecting tariff hikes of 15% in financial year 2027.
The brokerage wrote that Vodafone Idea is still in the early days of proving the success of its strategy of capex rollout and arresting subscriber losses. It wants to wait for more proof before turning constructive on the stock. Vodafone Idea's shares fell below their FPO price after the Supreme Court dismissed the curative petitions filed by telecom companies with regards to the AGR dues.
The company's current AGR dues stand at over ₹70,300 crore. Out of the ₹2.09 lakh crore worth of AGR and spectrum dues to be paid from financial year 2026 onwards, JPMorgan is assuming the deferred spectrum payments worth ₹29,000 crore may get equitised at a floor of ₹10 by the government, which can provide a floor to the stock.
But while Vodafone Idea would be able to pay its dues in financial year 2026 and 2027, it will fall short in financial year 2028, JPMorgan said. Out of the 22 analysts that have coverage on Vodafone Idea, 14 of them have a "sell" rating on the stock, while four analysts each have a "buy" and "hold" recommendation on the stock. As of June 30, Vodafone Idea had 48.
63 lakh small shareholders, which is a significant growth from the 36.18 lakh small shareholders that the company had at the end of the March quarter, as per the data available on the BSE. The company is yet to share the shareholding pattern for the September-ended quarter.
Shares of Vodafone Idea ended 2.8% lower on Wednesday at ₹9.23.
The stock has more than halved from its recent peak of ₹19.18..
