Nomura upgrades Vodafone Idea, doubles target price. Should you buy?
Vodafone Idea Target Price: Nomura has upgraded its rating on Vodafone Idea, expressing optimism that the worst is behind the company and it is now poised for better prospects. The stock has been upgraded from "reduce" to "neutral". Vodafone Idea's Q4 revenue stood at Rs 10,600 crore, which was in line with estimates.
Stating that the tempest has largely passed and is gearing up to meet clear skies ahead, Japanese broking firm has upgraded the stock to neutral from a reduce rating with a revised of Rs 15 from Rs 6.5."We note the outlook for the industry has improved considerably with all players aligned on the need for and the industry setting into a 3-private player market. We trim our FY25F EBITDA by 2% and raise FY26F EBITDA by 6%, on factoring in lower ," analyst Hemang Khanna said.
The telco's Q4 revenue of Rs 10,600 crore was broadly steady quarter-on-quarter in line with the estimate as higher-than-anticipated subscribers were offset by a modestly lower-than-anticipated ARPU of Rs 146.
The brokerage has valued using EV/EBITDA methodology using a multiple of 15x FY25F EV/EBITDA to arrive at the target price of Rs 15.
VIL's Rs 18,000 crore FPO will enable the company to catch up with peers on network experience, commence the and compete effectively in the industry and curb its subscriber losses. "We expect the industry to take a material of 15% following the conclusion of the Central elections, which should be a key trigger for the stock, and expect the government to offer some form of relief to the company when payments in FY25 come up," Khanna said.
However, Vi's long-term revival still depends on and moderation in competitive intensity, analysts say.
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has retained the sell call with an unchanged target price of Rs 10 but in the bull case scenario, it sees the stock going up to Rs 23.
"Vi reported in-line 4QFY24 results, with largely stable QoQ EBITDA, as the ARPU uptick was offset by continued subscriber decline. Vi remains a highrisk high-reward play (bull case: Rs23; bear case: Rs7)," it said.
Analysts at also noted that while a post-FPO VIL is treading a clear path to survival, a lot needs to fall into place, for it to become an investible idea.
"We have long maintained that VIL needs three events to play out to survive – capital infusion, liabilities waiver and tariff hikes. With the capital raise, it has achieved one and enabled another. We believe VIL is on its way to a ‘going-concern’ now – though still not completely out of the woods. We are tweaking FY25E/26E estimates by -2%," Nuvama said.
Source: Stocks-Markets-Economic Times
