The shares of Telecomm-Service company specializes in providing mobile telecommunications services, including voice, data, and digital solutions, is in focus after Global brokerage firm Citi initiated a Buy Target on it with a 67 percent Upside Potential.
Price action
With a market capitalization of Rs. 79,415.44 crores on Tuesday, the shares of Vodafone Idea Limited jumped upto 2.9, making a high of Rs. 7.43 per share compared to its previous closing price of Rs. 7.18 per share.
What Happened
Vodafone Idea Limited, engaged in providing mobile telecommunications services, including voice, data, and digital solutions, is in focus after Global brokerage firm CITI initiated a “Buy” Target of Rs. 12 on it with an upto 67 percent Upside Potential.
The reasons for the “Buy” target
- Government Waiver on Bank Guarantees
The Indian government waived the requirement for Vodafone Idea to furnish bank guarantees worth Rs. 24,800 crore for spectrum acquired between 2012–2021. This significantly reduces financial stress and improves the company’s ability to secure new funding. - Positive Impact on Indus Towers
Citi noted that this relief could lead to better payment visibility for Indus Towers, a key vendor, as Vodafone Idea’s financial position becomes more stable, benefiting both companies. - Focus on ARPU Growth
Vodafone Idea highlighted in its investor presentation that there’s substantial room for ARPU (Average Revenue Per User) growth. Usage has increased, but pricing hasn’t kept pace, offering a clear revenue growth opportunity. - Tariff Hike Potential
The company sees scope for further tariff hikes, arguing that customer affordability is already proven. Higher tariffs would help improve profitability and support future investments. - Capex Plan
Vodafone Idea plans to invest Rs. 50,000–55,000 crore over the next three years. This signals a clear commitment to network expansion and improved service quality, which is essential for long-term growth. - Subscriber Addition Strategy
The company aims to grow revenue through both subscriber additions and pricing improvements, indicating a dual growth strategy that strengthens Citi’s bullish outlook.
About the company
Vodafone Idea Limited, a leading telecommunications company in India, specializes in providing a wide range of mobile and internet services. Formed through the merger of two telecom giants, Vodafone India and Idea Cellular, the company offers voice, data, and value-added services across the country.
Market Structure
As of December 2024, the Indian telecom market comprises three private operators and one government operator. The market share distribution is as follows: BSNL + MTNL hold 8.1 percent, Vodafone Idea 18.0 percent, Bharti Airtel 33.5 percent, and Reliance Jio leads with 40.4 percent.
Shareholding pattern
The shareholding pattern of Vodafone Idea is as follows: the promoters hold 25.57 percent, Foreign Institutional Investors (FIIs) own 6.56 percent, while Domestic Institutional Investors (DIIs) hold 3.43 percent. The public holds the largest share, accounting for 64.45 percent.
Financials
The company’s revenue rose by 6.25 percent from Rs. 10,698 crore to Rs. 11,366 crore in Q3FY24 -25. Meanwhile, Net loss declined from Rs. 6,985.9 crore to Rs. 6,609.3 crore during the same period.
Written by Sridhar J
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