Overseas brokerage After Vodafone Idea Ltd.'s long-awaited stock raise was completed, Citi stated that the company's fortunes are finally coming together. Citi stated in a recent note that it believes the government's support amounts to doing whatever is necessary to maintain the three-player industry structure.
According to KM Birla, it has been crucial in preparing the business for a turnaround and a "new lease of life," as a tweet on X purportedly quoted Citi as stating. The information could not be independently verified by Business Today.
"We are also excited by the latest developments, as VI is able to expedite network investments and close the gap with rivals on 4G coverage & 5G rollouts thanks to the Rs200 billion equity issue and the Rs250 billion planned loan raise. But a lot still has to come together, starting with (several) tariff increases and stopping the subscriber loss, and preferably ending with (some kind of) debt relief, which is what's causing the 'High Risk' rating.
Citi announced that it has taken into account the equity offering, raised its FY25–26 Ebitda projections by 5–18%, and set a base case target price of Rs 15 for Vodafone Idea.
The main underlying assumptions in this case are that ARPU would increase by 60% over the course of 4 years, from Rs 143 to Rs 230, supported by 15% increases in 4G tariffs in each of the first two quarters of FY25 and FY26. Furthermore, it was predicated on the implied revenue market share staying constant at 16 percent and the government exercising its right to partially convert its outstanding debt into stock following the expiration of the moratorium. Furthermore, the curative petition (which is still pending in the SC) shows no AGR relief.
In the meantime, Vodafone Idea's bull case objective of Rs 25 was proposed by Citi. The bull case aim was based on many key assumptions, including greater price rises (20% each) that would raise the FY28E ARPU to Rs 250.
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