Home Investment / Trading StockMarket and Mutual Fund Investment Ideas vodafone idea shares: Is Vodafone Idea stock price heading for single digits? Red flags go up

vodafone idea shares: Is Vodafone Idea stock price heading for single digits? Red flags go up

0
vodafone idea shares: Is Vodafone Idea stock price heading for single digits? Red flags go up
NEW DELHI: From a low of Rs 2.83 apiece in February 2020 to a excessive of Rs 13.80 in January this 12 months, shares of Vodafone Thought rallied a whopping 5 occasions to ship 384 per cent returns to traders. However that rally is at risk now.

At Rs 12.05 apiece on Wednesday, the inventory stared at a major draw back, because the narrowing of December quarter losses by the telecom main did not enthuse Dalal Road. Analysts stated whereas the extension of fee of AGR (adjusted gross income) dues was a short-term breather, the corporate’s survival hinges on fast capital infusion and tariff hikes or ground tariff implementation.

Till that comes, lagging spends on community and market share loss would solely add to its woes, analysts stated, whereas suggesting targets as little as Rs 5 on the inventory, that means as much as 58 per cent potential draw back.

“Contemplating Vodafone Thought’s capital constraints, it’s executing properly. Nevertheless, until capital availability points are addressed, by capital elevate and tariff hike, it can’t break freed from the downward spiral of subscriber loss, additional impacting its capability to spend money on the community,” Edelweiss Securities stated.

Detrimental web price
Vodafone Thought had a destructive web price of Rs 43,474.70 crore at September finish whereas friends Reliance Jio and Bharti Airtel’s web price stood at Rs 1,79,617 crore and Rs 71,303.1 crore, respectively.

Emkay World stated a number of rounds of tariff hikes together with potential fund elevate and subsequent ramp-up in capex spends are important to carry the corporate from the present gloomy situation.

“The delay in fund-raise regardless of the corporate saying it in September 2020 and expectation of transaction closure inside 3-4 months is disconcerting, particularly contemplating the liquidity challenges,” the brokerage stated and suggesting a worth goal of Rs 5.

Q3 earnings

The telco reported a consolidated web lack of Rs 4,532.4 crore for December quarter in contrast with Rs 7,218.5 crore loss reported for the earlier quarter. Revenues grew 1 per cent quarter-on-quarter to Rs 10,894 crore. Analysts stated the discount in subscriber base by 20 lakh (to 26.98 crore) was decrease than expectations in contrast with common 1 crore subscriber loss within the final 4 quarters. The 4G subscriber base additionally noticed a modest addition of almost 30 lakh subscribers sequentially to 10.97 crore, which was higher than the 15 lakh addition it had reported for the September quarter.

The post-paid subscriber base stood at 2.08 crore, down by 4 lakh sequentially.

Tariff hikes

Due to 4G buyer addition, the corporate’s common income per person (Arpu) elevated to Rs 121 in December quarter from Rs 119 within the September quarter, nevertheless it remained considerably under Bharti’s Rs 166 and Jio’s Rs 151. The Arpu progress at 1.7 per cent sequentially for Vodafone Thought indicated the constraints of an natural Arpu hike, given its giant 2G person base and decrease utilization metrics i.e 12 GB per thirty days utilization for Vodafone Thought in contrast with 16.4 GB for Bharti and 12.9 GB per thirty days for Jio, analysts stated.

JM Monetary stated whereas the administration expects natural Arpu progress on the again of partnerships and reiterated that it might not draw back from elevating tariffs first, Vodafone Thought’s survival might be contingent upon a profitable fund elevate and robust and sustainable tariff hikes going ahead. The brokerage reiterated has a ‘promote’ ranking on the inventory, with a worth goal of Rs 7. It cited the dearth of visibility of tariff hikes.

Fund-raising
The telco’s board has permitted fund elevating of as much as Rs 25,000 crore via a mixture of debt. The corporate is in lively dialogue with potential traders and expects the fund elevate to happen quickly. “The necessity for capitalisation is of paramount significance, primarily because of its lagging spends on community and relative market share loss. We keep a ‘promote’ ranking with a DCF-based goal worth goal of Rs 6. We’ll monitor triggers like fund elevate and tariff hike earlier than altering our stance,” ICICI Securities stated.

Capex spend

December quarter capex spend for the telco fell to Rs 970 crore from Rs 1,040 crore within the September quarter. Kotak Securities stated given the stretched steadiness sheet, Vodafone has decreased capex meaningfully to Rs 2,610 crore for the primary 9 months, in contrast with Rs 10,900 crore incurred by Bharti throughout the identical time.

“The low stage of capex could make it troublesome for Vodafone Thought to regain competitiveness, as lowering general capex spends and give attention to prime circles solely might not be sustainable and may set off a downward spiral. Huge steadiness sheet restore is required to boost community investments to fascinating ranges,” it stated.

Thus far, the administration is specializing in making investments in 16 precedence circles, which contribute 92 per cent of income, moreover re-farming of 3G spectrum to 4G by ending 3G providers by FY22. Edelweiss stated excessive working and monetary leverage throws a variety of outcomes with respect to cost targets, however lack of readability on capital elevate retains it cautious on the inventory.

LEAVE A REPLY

Please enter your comment!
Please enter your name here