Vodafone Idea shares plummeted by 19.07%, closing at ₹10.44, after the Supreme Court dismissed the company’s curative petition for re-computation of its Adjusted Gross Revenue (AGR) dues. This decision prompted Nuvama analysts to revise their target price for Vodafone Idea from ₹16.5 to ₹11.5, citing the increased liabilities and ongoing financial strain.
Nuvama’s Revised Outlook
Nuvama Institutional Equities, in its latest report, maintained a ‘HOLD’ rating on Vodafone Idea but adjusted its price target to ₹11.5, reflecting the company’s continuing operational and financial challenges. The analysts highlighted that the rejection of the AGR plea removes any hope of reducing the burden of Vodafone Idea’s ₹700 billion AGR liabilities, which has placed a significant strain on the company’s already stretched balance sheet.
The report underlined three key conditions required for Vodafone Idea’s survival: capital infusion, tariff hikes, and liabilities waiver. With the Supreme Court ruling, the last of these three is now off the table, placing further pressure on the telecom operator’s ability to navigate its debt obligations and maintain operations.
Mounting Financial Challenges
Vodafone Idea’s liabilities stand at a massive ₹2.5 trillion, with ₹2.1 trillion related to spectrum and AGR dues. Although the government had provided a moratorium on these payments, the company will face deadlines starting in September 2025. According to Nuvama, Vodafone Idea will have to make substantial payments of ₹290 billion by March 2026 and ₹430 billion by March 2027, raising concerns about its ability to meet these obligations with its current cash flow and operational metrics.
The company has also been losing market share due to inadequate investment in 4G and 5G infrastructure, which has impacted its subscriber base and Average Revenue Per User (ARPU). Nuvama’s analysts emphasized that Vodafone Idea’s weak cash flow and subscriber losses could further delay its ability to raise the planned ₹250 billion in debt.
Stock Market Reaction and Future Outlook
The sharp 20% correction in Vodafone Idea’s stock price reflects the market’s adjustment to the increased liability following the Supreme Court decision. Nuvama analysts suggested that the market has already priced in these developments but noted that Vodafone Idea’s future largely depends on its ability to improve key operational metrics, including reducing subscriber churn, capitalizing on tariff hikes, and accelerating its network expansion.
The outlook for Vodafone Idea remains challenging, and without significant improvements in revenue and subscriber retention, Nuvama’s revised target price indicates limited upside for investors in the near term.
