Vodafone Idea Q2 Results Review - Inline; Subscriber Base Stabilisation Remains Key: Motilal Oswal

Motilal Oswal Report

Vodafone Idea Ltd. continues to lose market share to peers on account of lower average revenue per user translation, given its inferior subscriber mix and continued subscriber declines.

Vodafone Idea plans to embark on a significant capex cycle (Rs 500-550 billion over the next two-three years) to bridge the network gap with peers.

However, we believe Vodafone Idea’s network investments are contingent on debt raise, which in turn is dependent on securing bank guarantee waivers and continued support from Government of India (Rs 440 billion plus annual repayments to GoI from H1 FY26).

Further, we believe gaining back subscribers would be a tall ask for the company, given its peers’ superior free cash generation and deeper pockets.

Our earnings estimates are broadly unchanged as the lower subscriber base is offset by higher ARPU. Stabilization of Vodafone Idea's subscriber base remains the key monitorable.

We retain our Neutral rating on Vodafone Idea with a revised target price of Rs 8, based on DCF implied ~14 times Dec’26 EV/Ebitda.

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