Vodafone Idea Shares Rise 3% After Brokerages Pen Post-FPO Growth Prospects

Vodafone Idea’s stock rose on Wednesday following a block deal involving 19 crore shares worth ₹233.65 crore, according to BSE data. The telecom company’s stock climbed 2.67% to reach a day high of ₹12.71, compared to the previous close of ₹12.38.

What analysts have to say: Nuvama Institutional Equities noted on Wednesday that the telecom operator’s management appeared optimistic about growth prospects following a successful follow-on public offer (FPO).

The domestic brokerage highlighted three crucial requirements for Vodafone Idea’s survival: capital infusion, liabilities waiver, and tariff hikes. With the recent capital raise, the company has achieved one and set the stage for another.

“We believe VIL is on its way to a ‘going-concern’ now – though still not completely out of the woods. We maintain estimates and reiterate ‘Hold,’ with an unchanged target price of ₹14, valuing it at 11 times FY26 EV/EBITDA,” Nuvama stated.

Vodafone Idea is preparing to roll out 5G services in select regions within the next six to nine months. CEO Akshaya Moondra anticipates that the 5G rollout could cover 40% of the company’s overall revenue base in the next 24-30 months.

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Meanwhile, Citi analysts believe the stars are aligning for Vodafone Idea following its long-delayed equity raise. The investment bank believes that government support will ensure the stability of the three-player industry structure, giving Vodafone Idea a “fresh lease of life.”

Citi expects the ₹200 billion equity raise and planned ₹250 billion debt raise to enable Vodafone Idea to invest in its network, narrowing the gap with peers in 4G coverage and 5G rollouts. However, Citi noted that challenges remain, including multiple tariff hikes, stemming subscriber decline, and potential debt relief.

Citi revised its EBITDA estimates for FY25-26 upwards by 5-18% and introduced a base case target price of ₹15 for Vodafone Idea. Key assumptions include a 60% increase in ARPU over four years, supported by 15% 4G tariff hikes in 2QFY25 and 3QFY26, stable revenue market share at 16%, and partial conversion of government dues into equity.

In a bull case scenario, Citi set a target price of ₹25, assuming higher tariff hikes of 20% each, taking FY28 ARPU to ₹250.

Price Action: Vodafone Idea shares were trading 2.75% higher at ₹12.72 on Wednesday at midday.

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