Vodafone Idea (Vi) shares surged by 10% today, reaching the upper circuit limit of ₹10.02, following reports of a potential significant relief proposal by the government for telecom companies. The relief reportedly includes waiving 50% of interest and 100% of penalties on adjusted gross revenue (AGR) dues, potentially offering over ₹1 lakh crore in financial relief to telcos. Vodafone Idea is estimated to benefit by over ₹52,000 crore, while Bharti Airtel could see a reduction of nearly ₹38,000 crore in liabilities.
Analysts are optimistic about the proposal’s impact, suggesting it could prevent the telecom market from turning into a private sector duopoly. Discussions are reportedly underway at the highest levels of the government, with an announcement likely in the upcoming Union Budget on February 1.
IIFL’s Insights on Telecom Sector
IIFL Securities noted that the AGR relief could drive significant upside for telecom stocks, with Vodafone Idea potentially gaining ₹7 per share, Bharti Airtel ₹62, and Bharti Hexacom ₹29. IIFL added that this relief, combined with the recent bank guarantee waiver, enhances Vodafone Idea’s prospects for raising ₹25,000 crore in debt and completing its ₹50,000-₹55,000 crore capex program by FY27.
The brokerage, however, cautioned that even with an annual relief of ₹11,500 crore, Vodafone Idea would still face cash deficits in the near term, potentially necessitating equity conversion of some dues by the government. IIFL remains positive on Bharti Airtel, Bharti Hexacom, and Indus Towers.
Vodafone Idea Stock Performance:
- Current Price: ₹10.02 (+9.99%)
- Market Cap: ₹701.22 billion
- Day Range: ₹10.02 – ₹10.02
- 52-Week Range: ₹6.61 – ₹19.18
While the potential relief has brightened prospects for the sector, analysts emphasize the need for structural reforms to address Vodafone Idea’s long-term financial stability.
