Vodafone Idea shares climbed 6.64% this morning. The firm’s market cap increased to Rs 99,525 crore. 1443.24 lakh shares traded on BSE, totaling Rs 212.27 crore turnover.
Vodafone Idea shares surged over 6% in early Friday trades following UBS’s upgrade to ‘Buy’ from ‘Neutral’. UBS adjusted the target price to Rs 18 from Rs 13.10. The telecom stock rose 6.64% in the morning session. Market cap reached Rs 99,525 crore. 1443.24 lakh shares exchanged hands, totaling Rs 212.27 crore turnover on BSE.
Regarding technical indicators, Vodafone Idea’s relative strength index (RSI) is at 61.3, suggesting it’s neither overbought nor oversold. The stock’s one-year beta is 1.1, indicating high volatility. Vodafone Idea shares surpass the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day moving averages.
The stock reached its 52-week high at Rs 18.42 on January 1, 2024, and hit a low of Rs 6.87 on May 25, 2023.
UBS anticipates a 70-80% upside in the telecom stock. The brokerage suggests potential relief such as AGR reduction by the Supreme Court or government interventions like equity conversion or moratoriums, considering the government’s aim to maintain three viable private telcos.
UBS states the stock market anticipates a 15-20% mobile tariff increase in the next 12-24 months. This expectation coincides with the conclusion of Vodafone Idea’s follow-on public offer (FPO) and the focus of Bharti Airtel Ltd and Reliance on prioritizing return on invested capital (ROIC) over gaining market share.
UBS forecasts a 70–80% rally for Vodafone Idea, citing potential relief such as an AGR reduction by the Supreme Court or equity conversion, coupled with government moratoriums. This outlook aligns with the government’s objective of sustaining three autonomous private telecom companies.
Currently, UBS sets Vodafone Idea’s target price at ₹18, assuming a 50% probability of AGR dues waiver. While there’s potential for further relief like spectrum dues actions, UBS deems these scenarios less probable and excludes them from its base price target assessments.
The brokerage noted that Vodafone Idea, despite being highly leveraged to potential relief, trades at approximately 11 times FY26e EV/Ebitda, similar to Airtel and Jio. They find the risk-reward appealing amid such announcements and upgrade to Buy. In its report, the brokerage maintained a Neutral stance on Bharti Airtel and Indus Towers.
The global brokerage adjusted its forecasts for Indus, now considering three viable private telcos in the Indian telco sector. They anticipate the tenancy ratio to increase from 1.68x in FY24 to 1.70x in FY28, with Vodafone Idea’s receivables largely settled, resulting in a DCF value of ₹355 per share. Despite this, the brokerage maintains a Neutral stance.
You might also be interested in: Vodafone Idea CEO states government dues for FY27 could be converted into equity.
