What brokerages are saying about Vodafone Idea post Q4 earnings

MUMBAI: Most brokerages have maintained a bearish view on Vodafone Idea as the company posted a loss of Rs 6,985.1 crore for the March quarter and raised concerns over its viability. CLSA and Credit Suisse have maintained an underperform rating, JP Morgan has an underweight recommendation with a price target of Rs 3 and Goldman Sachs has a sell stance with a price target of Rs 3.

Analysts said Vodafone Idea's capital expenditure continues to lag that of peers, which is why the underperformance is likely to continue.

"Vodafone India has large repayments due starting December 2021, and at current EBITDA run-rate, we estimate the company could have a Rs 23,400 crore cash shortfall until April 2022," said Goldman Sachs.


JP Morgan said Vodafone Idea remains challenged with need for capex acceleration for closing network gaps and a highly levered balance sheet. "Vi continues to struggle in a polarizing market that benefits peers with greater scale and improving network capacity post recent auctions. We shave revenue and EBITDA estimates by 2-7% over FY22-23," said JP Morgan.

CLSA's view concurred with that of JP Morgan and Goldman Sachs.

"...with $24 billion in debt, of which 88% is for spectrum and AGR (adjusted gross revenue), it is headed for financial crisis when annual payments come due. Ahead of V-Idea’s potential $3 billion in annual cash outgo, inevitable is a review of AGR and tariff hikes or the sector is headed towards a duopoly," said CLSA.