Vodafone Idea shares jump 12% after CARE revises ratings upwards
Vodafone Idea shares experienced a significant surge of 12% intraday, reaching a high of 14.85 on the NSE on Wednesday. This uptick followed an announcement from rating agency CARE Ratings, which upgraded the company's Long Term Bank Facilities from B+ to BB+, with a stable outlook. Additionally, the Short Term Bank Facilities were upgraded from A4 to A4+.
jumped 12% intraday to hit the day's high of 14.85 on the NSE on Wednesday after rating agency upgraded the company's Long Term Bank Facilities to BB+ from B+, holding the outlook stable. The Short Term Bank Facilities has also been upgraded to A4+ from A4.The announcement was made by the company on Tuesday post market hours and the stock had settled at Rs 13.20, plunging nearly 17% on the counting day reacting to the outcome of the election results which indicated Bharatiya Janata Party (BJP) missing the majority mark by itself. While BJP has fallen short of the finish line it will still be able to form a government with the help of its alliance partners.
Street is also anticipating an industry wise increase in which may help them improve their balance sheets.
While the brokerage firm has maintained its 'sell' rating on the stock, estimating targets to slide to Rs 8, it has also created a bull case scenario where the targets estimated are at Rs 20. But that comes with a strong assumption that sharper tariff hikes would drive to Rs 200 by FY26 and Rs 300 by FY30. The company must also hold on to its current of 213 million versus 188 million assumed by FY30 in its base case.
Moreover, the extension of moratorium (beyond FY26/FY27) and/or partial equity conversion of dues depending upon VIL’s evolving liquidity position could be a variable at play, said.
The telco’s average revenue per user (ARPU) — a key performance metric — also rose 0.7% sequentially to Rs 146 in Q4FY24, mainly helped by increased pricing of entry-level plans in some markets and addition of 4G data subscribers.
Vodafone Idea’s net loss for the fiscal fourth quarter, FY24, widened to Rs 7,675 crore from Rs6986 crore in the previous three-month period which had seen an exceptional gain even as the stressed telco continued to be dragged by high debt and customer losses.
Operationally, the joint venture between UK’s and India’s Aditya Birla Group saw improvement and said it reported its highest-ever quarterly earnings before interest, tax, depreciation and amortization (EBITDA) post the 2018 merger of Rs 2,180 crore.
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