CLSA has retained its underperform rating on Vodafone Idea shares, factoring in the AGR risk at ₹7 per share, which accounts for 40% of the stock’s fair value. The brokerage highlights the significant financial pressure the company faces due to its large debt burden and AGR liabilities.
AGR Risk Comparison: Vodafone Idea vs Bharti Airtel
For Bharti Airtel, CLSA estimates that the AGR risk is much lower, at ₹62 per share, representing only 3% of the company’s fair value. Despite the AGR issue, CLSA retains an outperform rating on Bharti Airtel, given its stronger financial position and ability to manage its liabilities more effectively.
Vodafone Idea’s Debt and AGR Dispute
Vodafone Idea had previously self-assessed its AGR dues at ₹21,500 crore, significantly lower than the Department of Telecommunications’ (DoT) estimate of ₹58,300 crore. As of Q1, Vodafone Idea’s debt includes ₹70,300 crore for AGR dues, in addition to ₹1.39 lakh crore for spectrum liabilities.
CLSA points out that AGR relief is crucial for Vodafone Idea’s survival. Without such relief, the company could face a financial crisis in the second half of FY26 or FY27, when its annual spectrum and AGR payments of $4-5 billion are due.
Outlook for Vodafone Idea
While the Supreme Court’s dismissal of the AGR petition has reduced the likelihood of a waiver, CLSA emphasizes that Vodafone Idea’s future depends on the next steps from the government and the industry. Without relief, the company’s financial situation could worsen, leading to a significant liquidity crisis in the coming years.
