Vodafone Idea Q1 Review: Not Out Of The Woods Yet, Say Analysts
The miss was on account of flat ARPU, which came slightly below estimates, said Citi.
Even as its net loss narrowed in the first quarter, Vodafone Idea Ltd. is not out of the woods yet, according to analysts. The company's average revenue per user came in slightly below estimates, said Citi.
Net loss of the telecom player stood at Rs 6,432.1 crore in the June quarter in comparison to a loss of Rs 7,675 crore in the last quarter, according to an exchange filing on Monday.
Its revenue decreased 1% quarter-on-quarter for the three months ended June to Rs 10,508.3 crore. Analysts had projected a revenue of Rs 10,655 crore.
While ARPU was flat quarter-on-quarter, it rose 4.5% year-on-year to Rs 146.
Vodafone Idea Q1 FY25 Result Highlight (Consolidated, Quarter-on-Quarter)
Net loss at Rs 6,432 crore vs loss of Rs 7,675 crore.
Revenue down 1% at Rs 10,508 crore vs Rs 10,607 crore.
Ebitda fell 3% at Rs 4,205 crore vs Rs 4,335 crore.
Margin at 40% vs 40.9%.
Earnings Call Takeaways
Discussions with lenders for Rs 25,000 crore fund-based and Rs 10,000 crore non-fund-based facilities are ongoing, the company said in a post earnings conference call.
It is planning a cumulative capex of Rs 50,000-55,000 crore over the next three years.
Initial trends following tariff hikes are largely in line with past hikes. It is too early to comment on SIM consolidation or higher churn, the company said.
The company is seeking recomputation of dues by the government, as well as seeking waiver of interest and penalty.
Fund Raise Plans
Vodafone Idea raised Rs 18,000 crore via follow on public offer—the largest in India which was subscribed 6.3 times. It also had preferential issuance of equity shares worth Rs 2,080 crore to ABG entity (promoter group) and worth Rs 2,460 core to Nokia and Ericsson.
Conversion of optionally convertible debentures worth Rs 1,600 crore into equity happened between March and July 2024.
Here is what brokerages have to say about Vodafone's first quarter results.
Citi
Maintained 'buy' with a target price of Rs 22 per share from Rs 23 apiece, implying an upside 42%.
Losses were stable, the miss was on account of flat ARPU, which came slightly below estimates.
Benefit of tariff hikes will be visible second quarter onwards.
Company is awaiting the AGR curative petition to be admitted for hearing.
Favourable developments in the AGR case and completion of the ongoing debt raise are positive triggers
Nuvama
Maintained 'hold' with an unchanged target price of Rs 16.5 per share, an upside 6%.
Modest performance in Q1FY25 was in line with expectations, it said.
All eyes are now on how the recent tariff hikes revive the sector.
Company is on its way to becoming a ‘going concern’.
It is still not completely out of the woods.
Nomura
Retained a 'neutral' rating with a target price of Rs 15 per share, implying a downside of 3%.
ARPU came below expectations.
Outlook for the company remains constructive underpinned by:
a) Improvement in operating metrics underpinned by ongoing network investments and 5G rollout.
b) All three private players aligned on need for further significant ARPU repair.
If VIL is able to materially arrest the decline in its subscriber base in the coming quarters and revert to growth, it will materially improve the outlook for the stock and drive earnings upgrades.
