Vodafone Idea shares rally 10% ahead of Budget 2026; likely reasons

Heavy buying was seen in shares of Vodafone Idea Ltd (Vi) on Friday ahead of the Union Budget on February 1. While there was no fresh trigger or stock exchange filing, the telecom sector is holding some hopes from the forthcoming Budget. Besides, the telecom operator recently announced a Rs 45,000 crore capex plan for the next three years. The Vodafone Idea's management is aiming to reach parity with peers on 4G network coverage in 17 priority circles and roll out seamless 5G across urban markets. Around 70 per cent of the capex is expected to be spent on tower additions.

At 10.18 am, Vodafone Idea shares were trading 9.84 per cent higher at 11.04 apiece on BSE, trimming January losses to 4.91 per cent. 

Axis Securities in its Budget 2026 note said the telecom industry is seeking GST relief on regulatory payments, including exemption or reduction of GST from 18 per cent to 5 per cent on license fees and spectrum charges.  Additionally, it is expecting allowing of ITC utilisation for RCM liabilities, which may ease cash flows and support higher investments in network expansion. 
As per the brokerage, the Budget is expected to support 5G expansion and 6G preparedness through extension of PLI schemes.

The Cellular Operators Association of India expects a reduction in the license fee from the current 3 per cent to 0-5-1 per cent of AGR dues, Axis Securities noted.  

For the December quarter, analysts said a fall in the Vi's subscriber base offset ARPU growth during the quarter. While the moratorium from the Department of Telecommunications (DoT) provided Vi with much-needed breathing space, analysts said the telecom operator is still not completely out of the woods. 

"We reiterate our Neutral rating on Vi with a revised target price of Rs 10 (earlier
Rs 11), based on DCF implied 13 times FY28E EV/Ebitda, implies 21.5 times FY28E pre IND AS Ebitda, which is at a significant premium to Vi’s larger peers," MOFSL said.

JM Financial said it has cut Vodafone Idea's FY26-FY28 revenue and Ebitda estimates by 8-16 per cent, due to change in assumption of the next tariff hike while aligning with 9MFY26 results. It revised its target price to Rs 11 per share and maintained 'ADD' rating on Vi.