Vodafone Idea : Shares Rise 2% After JM Financial Raises Target to ₹12.50 and Maintains “Add”

Vodafone Idea: In its telecom sector preview, JM Financial maintained a “Add” for the company, upping its target price to ₹12.50 from ₹11.50, noting modest ARPU growth despite ongoing customer attrition. This led to an almost 2% increase in Vodafone Idea shares. The changes in AGR dues and the occasional court orders have been the primary factors influencing its pricing during the last many quarters. According to both firms’ regulatory filings, the indebted telecom operator is also expected to collect around ₹5,836 crore from Vodafone Group as part of the settlement of a liability claim agreement between the two businesses.According to the provisions of the modification agreement, Vodafone Group promoters would provide ₹2,307 crore for Vodafone Idea over the course of the following 12 months.

For the benefit of Vi, Vodafone Group has also put aside its 328 crore shares. Vi will be able to give Vodafone instructions to sell these shares in one or more tranches, with Vi receiving any cash proceeds.According to the Vi filing, the market value of the designated shares as of the amended agreement date is ₹3,529 crore.At the time of the 2017 merger agreement between Vodafone India and Idea Cellular, Vodafone Group and Vodafone Idea (Vi) entered into a Contingent Liability Adjustment Mechanism (CLAM) that covers pre-merger contingent liabilities pertaining to legal, regulatory, tax, and other matters of the two merging parties.Vodafone’s maximum exposure under the CLAM was restricted at ₹8,369 crore at the time of the merger; after accounting for payments previously made, the reduced exposure was capped at ₹6,394 crore. The agreement’s deadline after an extension was December 31, 2025.

The firm anticipates a somewhat flat sequential performance for the December quarter. Even as the business adds approximately 5 lakh mobile broadband customers, net subscriber losses of about 35 lakh are anticipated to counterbalance a tiny 1.1% quarter-over-quarter increase in ARPU to ₹169. It is anticipated that revenue would stay constant at around ₹11,200 crore, and reported EBITDA will likewise be same at about ₹4,700 crore. While the net loss for the quarter is projected to be ₹6,986 crore, Pre-Ind AS (cash) EBITDA is anticipated to increase marginally to ₹2,260 crore.

In the meanwhile, the proprietors of Vodafone Idea have taken action to settle residual debts resulting from the merger of Vodafone India and Idea Cellular in 2017. 3.28 billion equity shares, or around 3.03% of the company’s total equity, have been set aside by promoter companies to settle outstanding debts. These shares are valued at ₹3,529 crore. Three Vodafone Group promoter firms are involved in the agreement, which provides a methodical way to fulfill previous commitments. Analysts warn that the stock will probably continue to be volatile in the future. In a fiercely competitive telecom industry dominated by more financially stable competitors, Vodafone Idea’s long-term prospects depend on its capacity to secure new capital expenditure financing, stop subscriber losses, and reclaim market share. The stock has increased by more than 35% over the last 12 months, 51% over the previous 6 months, 32% over the last 3 months, and 13% over the last month.