Vodafone Idea shares tumble 24% in 2 days, slip below Rs 10 mark

The apex court reaffirmed its decision on the AGR ruling against telecom companies, upholding the full amount of the AGR demand, which amounts to Rs 58,000 crore. With the interest levy, this burden has now risen to Rs 70,320 crore as of the end of FY24.

Following this update, the market has a mixed view on the stock. Global brokerage firm Nomura has upgraded Vodafone Idea from neutral to buy, setting a target price of Rs 15. It believes the worst is behind us with the conclusion of the AGR overhang. The recent sharp correction, combined with a strong industry outlook, presents a buying opportunity, as government support could significantly ease Vodafone Idea’s funding gap.

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Meanwhile, another foreign brokerage firm, UBS, stated that Vodafone Idea’s fair value per share could range between Rs 12 (with no relief on AGR) and Rs 24 (with full relief or waiver of AGR). The stock is currently marginally below this implied fair value. UBS noted that they do not rule out the possibility of an equity conversion or deferral; however, it remains to be seen whether these measures will be NPV positive for equity holders.

Sushil Choksey of Indus Equity Advisors stated that Vodafone Idea will need to undertake some form of fundraising, likely from shareholders, as the company must strengthen its balance sheet and repay the AGR dues unless the government grants them more time to do so.However, Choksey is confident that the government’s intent is to keep all three companies—Jio, Airtel, and Vodafone Idea—in the market, particularly Vodafone. He believes they will ensure that all forms of support are provided to shareholders.Choksey anticipates a positive outcome from this scenario for shareholders, even if the short-term effects may not be favorable.

As of around 9:30 am, Vodafone Idea shares were trading 2% lower at Rs 10.17 on the BSE.

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