Vodafone Idea shares climb 4%, a day after falling 11%; key details

Shares of Vodafone Idea Ltd (VI) climbed 4 per cent in Thursday's trade, a day after tumbling 11 per cent. The scrip had fallen in the previous session as no waiver on the pending dues linked to adjusted gross revenue (AGR) was provided by the Cabinet, contrary to the Street's expectations of at least a 50 per cent waiver. That said, the Union Cabinet has granted VI a five-year interest-free moratorium on its Rs 87,700 crore AGR dues before FY18, which will be payable over FY32-41.

At 9.31 am, the stock was trading 4.46 per cent to hit a high of Rs 11.24 apiece. The scrip is up 30.60 per cent in the past three months against an 11.62 per cent rise in the BSE Telecommunication index.

Brokerages noted that the DoT will form a committee for the reassessment of AGR dues in six-eight months, which will include reassessment of the frozen AGR dues based on audit reports. "This leaves scope for further reduction in the AGR liability for the company. While the relief package addresses AGR dues, VI also has Rs 1.2 lakh crore of deferred payment obligations toward spectrum, with significant scheduled payments between FY26 and FY44," Emkay Global said in a note.

It said VI's prevailing Ebitda is insufficient to meet the capex or the spectrum debt repayment requirement. The company will need additional relief to alleviate such challenges, it said while maintaining 'Sell' rating on VI with a target price of Rs 6 per share.

"Despite government relief packages, VI’s leverage remains high. We believe that the government is taking enough steps to ensure that the company remains solvent. However, to make VI a structurally strong company with manageable leverage, the government will need to make deeper reforms. VI’s valuations at 13.6x FY27E EV/Ebitda are expensive," Emkay said.