Neutral Vodafone Idea; target of Rs 15: Motilal Oswal

Motilal Oswal's research report on Vodafone Idea

Vodafone Idea (VIL) reported a 1%/4% revenue/EBITDA decline sequentially (pre-Ind-AS-116), due to subscriber loss, flat ARPU, and operating deleverage. Overall subscriber loss of 2.5m continued, but data subscribers remained flat. The capital raise has led to some respite as the long pending capex and continuous subscriber churn were hurting its operating performance. With the fundraising, the capex was directed towards the rollout of 4G and 5G. We broadly retain our estimates and expect revenue/EBITDA (pre-Ind-AS- 116) CAGR at 11%/31% over FY24-26. Assuming a 15x EV/EBITDA and a net debt of INR2t, there is limited opportunity for the stock.

Outlook

We are factoring in a revenue/EBITDA CAGR of 11/31% over FY24-26E. Assuming 15x EV/EBITDA, coupled with net debt, we derive our TP of INR15. Reduction in AGR liability and restriction in subscriber churn rate could remain the key catalysts for the stock. We reiterate our Neutral rating on the stock.