Neutral Vodafone Idea; target of Rs 9: Motilal Oswal

Motilal Oswal's research report on Vodafone Idea

VIL posted an adjusted EBITDA of INR17.1b (excluding an INR4.5b one-off on a pre Ind AS 116 basis), down 5% QoQ (16% miss) on continuing subscriber churn and weak ARPU. Upcoming debt repayments of INR60b in FY22 and INR82b deferred spectrum payments require an immediate liquidity support. EBITDA (pre Ind AS 116) of INR88b in FY22E makes it challenging to service its net debt of INR1,190b (excluding AGR and lease liability) and invest in its network. We maintain our Neutral rating.

Outlook

The current low EBITDA would make it challenging to service debt without an external fund infusion. Assuming 8x EV/EBITDA, with a net debt of INR1,190b (excluding lease liability and AGR debt), it leaves limited opportunities for VIL’s equity shareholders. We maintain our Neutral rating.

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