Citi gives Vodafone Idea a Buy rating with a ₹12 target price. Currently trading at ₹7, this stock has the potential to deliver a 67% return.
Vodafone Idea Share: Vodafone Idea, a major player in the Indian telecom sector, is once again attracting investor attention. Global brokerage firm Citi has given the telecom stock a 'Buy (High Risk)' rating with a target price of ₹12. This implies a potential return of approximately 67% compared to the current price of ₹7.18.
Expectations driven by Government stake, ICRA rating, and Capex plan
According to Citi's report, the government's stake in the company has increased to 49% after converting ₹3,700 crore in spectrum dues into equity. Furthermore, credit rating agency ICRA has upgraded Vodafone Idea's rating to Investment Grade (BBB-), facilitating easier access to bank loans for the company.
ARPU increase expected, revenue growth anticipated from tariff hikes
Citi's report indicates that the company will now focus on improving ARPU (Average Revenue Per User) and customer retention. The company acknowledges that data usage has increased rapidly, but tariff increases haven't kept pace. Considering inflation and rising costs, further tariff hikes are necessary. Vi has also announced a Capex of ₹50,000-55,000 crore over the next three years.
Brokerage View: Positive outlook on both Vi and Indus Towers
Brokerage firm Citi has expressed a positive outlook on both Vodafone Idea and Indus Towers. The brokerage believes that tariff hikes and subscriber growth will be the key drivers of revenue growth. This was reiterated in the company's investor presentation on April 9th.
Vodafone Idea Rating & Share Performance
Vodafone Idea is covered by 21 analysts, of whom:
11 have given a 'Sell' rating
5 have given a 'Buy' rating
5 have given a 'Hold' rating
Meanwhile, for Indus Towers, 24 analysts have:
13 given a 'Buy' rating
6 given a 'Hold' rating
5 given a 'Sell' rating
The share closed at ₹7.18 on Friday, up 1.13%, and saw a rise of over 2% at the opening on Tuesday. Indus Towers' share closed at ₹373.40, up 0.86%.
Performance against 52-week high
Vodafone Idea's share has fallen 171% from its 52-week high of ₹19.15. The 52-week low was ₹6.60. The share has remained relatively flat over the past month, while it has seen a decline of 5.77% over the past year. The company's market cap on the BSE is ₹80,173.85 crore.
