Nomura upgrades Vodafone Idea to neutral, ups target price to Rs 15 a share

Brokerage Nomura has upgraded Vodafone Idea Ltd to neutral from reduce and increased target price to Rs 15 a share, up 13.2 percent from previous close amid improved outlook following the conclusion of its fund raise and inline 4Q.

Nomura suggests that while there's still a journey ahead, the worst of the storm has passed for VIL, with clearer skies on the horizon. They update their valuation to March 2026, applying an EV/EBITDA multiple of 15x. The industry outlook has improved significantly, with all players now focused on increasing ARPU and the market settling into a three-private player dynamic, they said.

Nomura slightly reduced its FY25F EBITDA forecast by 2% but raised FY26F EBITDA by 6%, considering lower subscriber losses. VIL's successful fundraising enhances its prospects, enabling it to enhance network experience, start 5G rollout, and compete effectively. They anticipate a substantial 15% tariff hike post-Central elections, which could be a significant trigger for the stock. Additionally, they expect government relief for VIL's FY25 payments.

Telecom operator Vodafone Idea (Vi) on May 16 reported a net loss of Rs 7,674 crore for the quarter ended 31 March, 2024. The company's loss widened in the quarter under review from Rs 6,418.9 crore in the year-ago period. Revenue from operations increased marginally at Rs 10,606 crore from Rs 10,531 crore in the same quarter last fiscal.