Vodafone Idea shares climb as subscriber additions turn positive for first time since merger; targets revised - BusinessToday

Shares of Vodafone Idea Ltd (VIL) moved higher in early trade on Wednesday after the telecom operator's subscriber additions entered positive territory during the June quarter. At the last check, the stock was trading 4.64 per cent higher at Rs 13.52.

According to global brokerage Nomura, VIL added 3 lakh subscribers in the June quarter, taking its subscriber base to 19.31 crore. This marked the company's first quarterly net subscriber addition since Vodafone India and Idea Cellular merged in 2018 to form Vodafone Idea.

Nomura noted that VIL's Q1 FY27 revenue stood at Rs 11,700 crore, up 3.2 per cent quarter-on-quarter (QoQ) and 6 per cent year-on-year (YoY), and was 1.6 per cent ahead of its estimate. Average revenue per user (ARPU) increased 1.7 per cent QoQ to Rs 177, in line with its estimate.

"EBITDA at Rs 5,030 crore was up 3 per cent QoQ (9.1 per cent YoY), and 0.5 per cent ahead of our estimate; margin was flat QoQ at 43.1 per cent. EBITDA exIND AS impact at Rs 2,480 crore was up 1.8 per cent QoQ and 13.5 per cent YoY. Net debt declined 20.5 per cent QoQ to Rs 1.5 lakh crore from Rs 1.9 lakh crore in Q4 FY26, aided by the receipt of part proceeds from the warrant issuance. Capex decreased 15.9 per cent QoQ to Rs 1,900 crore due to supply-side issues," it added.

As part of its three-year capex programme of Rs 45,000 crore, Nomura highlighted that VIL has already placed capex orders worth Rs 9,000 crore, which will be deployed over the next two quarters.

"Management reiterated its FY29E targets of a 16.8 per cent revenue CAGR (11 per cent our estimate), sustained positive net subscriber additions and 3x cash EBITDA (implying a 44 per cent CAGR vs 24 per cent our estimate) from the FY26 base of Rs 9,200 crore. We are building in a gradual increase in subscriber additions of 28 lakh/6 lakh/8 lakh in FY27/28/29F, and a ~9 per cent ARPU CAGR over FY26-29F, resulting in 15 per cent/26 per cent EBITDA/ FCF CAGRs during the same period," Nomura further stated.

The brokerage maintained its 'Neutral' call on the counter but raised its target price to Rs 13.50 from Rs 12.60 earlier.

Meanwhile, Nuvama Institutional Equities said VIL had arrested subscriber losses and improved ARPU and churn, with the focus now shifting to capex deployment and the delayed debt fund raise.

"We tweak our FY27E/28E EBITDA by -2.6 per cent/-0.8 per cent as we push forward FY27 tariff hike by a quarter. We continue to value VIL at 12x FY28E EV/EBITDA," the domestic brokerage added.

Nuvama retained its 'Hold' rating on the counter but trimmed its target price to Rs 13 from Rs 13.50 earlier.

On the other hand, JM Financial kept its 'Add' call on VIL, while reducing the target price to Rs 14.7 from Rs 15.5 earlier.