Vodafone Idea shares drop 4% post Q4, warrants; JM ups target by 55%! 

Shares of Vodafone Idea Ltd (VIL) fell nearly 4 per cent in Monday's trade, even as the telecom operator's reported Rs 51,986 crore in March quarter profit. The stock fell on profit taking after a 32 per cent surge in one month amid VIL board's decision to issue fully-convertible warrants of Rs 4,730 crore, roughly $500 million, to the Birla group family entity on preferential basis, at an exercise price of Rs 11 per warrant. The equity infusion is seen as promoter confidence in the telecom operator.   

JM Financial target price on VIL

JM Financial, which has upped its target price on VIL by 55 per cent to Rs 14 from Rs 9, said a key factor to watch from VIL's perspective would be if the move gives comfort to the lenders to approve the long-pending Rs 25,000 crore debt fund-raise, needed to execute VIL’s network-upgradation capex of Rs 45,000 crore to help grow its subscriber (subs) base. On Monday, the VIL stock fell 3.86 per cent to hit a low of Rs 12.45 apiece.

Vodafone Idea warrants issue

Assuming full conversion, the government's stake in Vodafone Idea will dilute to 47.1 per cent from 49 per cent currently and Vodafone Plc group stake would fall to 15.5 per cent from 16.1 per cent, whereas Aditya Birla Group stake would rise to 13 per cent from 9.6 per cent. 

Following Vodafone Idea's Q4 results, JM Financial raised its FY27-FY28 revenue and Ebitda for VIL by 1–3 per cent, accounting for slightly higher ARPU and reduced net subs loss in Q4FY26. 

"Our TP has also been revised to Rs 14 per share due to reduction in debt by Rs 55,000 crore post AGR relief). We maintain ADD. Key variables to monitor remains lenders’ approval of Rs 25,000 crore debt-raise and its impact on VIL’s subs market share trends, and any potential relief on huge spectrum dues of Rs 1,27,400 crore like AGR relief," it said. 

MOFSL, SBICap Securities on VIL

MOFSL said Aditya Birla Group's announcement  its intention to invest in VIL through warrants over the next 18 months is sentimentally positive. "However, expedited debt raise remains critical for VIL to meet its capex guidance over FY26-28," the brokerage said while suggesting a 'Neutral' rating on the stock.

SBICap Securities also called the warrant move as positive from short to medium term perspective. UBS, which sees early signs of operating turnaround for VIL, retained 'Neutral' and a target price of Rs 12.40 on the stock. Citi has reportedly suggested 'Buy' on the stock as AGR reset and promoter backing is said to have improved funding visibility.