Vodafone Idea Ltd. share price target

Except 4G subscriber base, all the other KPIs signal weak performance for VIL in this quarter. Despite management's committed focus to expand coverage and capacity, company's future prospects largely depend on its ability to generate higher ARPU and a near-immediate need of fund infusion to keep the operations going. Keeping a close watch on the developments, we maintain our HOLD rating on the stock with a revised TP of Rs. 9.6 based on 8x FY23E EV/EBITDA Deteriorating subscriber base and ARPU impacts topline...

VIL remains the weakest private telco. AGR dues payment extension was only a short-term breather and its survival hinges on quick capital infusion and tariff hike/floor tariff implementation. The need for capitalisation is urgent mainly due to its upcoming payment commitments, lagging spends on network and continued relative market share loss. We maintain SELL rating with a DCF based target price of | 5/share (vs. | 6/share, earlier). We...

VIL posted an adjusted EBITDA of INR17.1b (excluding an INR4.5b one-off on a pre Ind AS 116 basis), down 5% QoQ (16% miss) on continuing subscriber churn and weak ARPU. Upcoming debt repayments of INR60b in FY22 and INR82b deferred spectrum payments require an immediate liquidity support. EBITDA (pre Ind AS 116) of INR88b in FY22E makes it challenging to service its net debt of INR1,190b (excluding AGR and lease liability) and invest in its network. We maintain our Neutral rating....

Company needs to increase its ARPU substantially from current levels, a task made difficult with dwindling total active subscriber count. Longterm growth depends on pending tariff hikes and customer retention, in addition to fund infusion on a near immediate basis to continue to function as an ongoing concern. Maintaining a cautious view, we retain our HOLD rating on the stock with a rolled forward target price of Rs. 12.7 based on 6.7x FY23E EV/EBITDA. Sequential recovery seen in topline In Q3FY21, Vodafone Idea's revenues went up slightly by 1.0% QoQ to Rs. 10,894cr (1.8% YoY), primarily on account of improvements seen in 4G subscriptions. Churn rate...

Overall churn rate moderates; post-paid base loss continues Some improvement was seen across KPIs. The subscriber base declined by ~2 million (mn) to 269.8 mn (much lower than last four quarter's run rate of ~9.8 mn decline), with churn rate reducing to 2.3% (vs. 2.6% in Q2FY21), which, we believe, is due to network integration completion. The 4G sub base saw a modest addition of ~3 mn QoQ to 109.7 million, albeit better than 1.5 mn addition in Q2. The post-paid sub base at 20.8 mn, however, was down by 0.4 mn QoQ. Similarly, capex at | 970 crore (vs. ~| 1040 crore...

Adjusted EBITDA (excluding a one-off expense of INR3b on a pre Ind AS 116 basis) was up 15% QoQ (9% beat) due to strong cost rationalization, reducing SG&A; by 32% QoQ as subscriber churn significantly decelerated. VIL's liquidity, ability to invest on its network as well as protect its market share is constrained by the humongous net debt of INR1,171b and meager FY22E EBITDA of INR107b (pre Ind AS 116), thus dependent on a further fund raise. We change our rating from Under Review to Neutral....

Weakness was seen across KPIs. The overall subscriber base declined by ~8 million to 271.8, with churn rate increasing to 2.6% (vs. 2.0% in Q1FY21). The 4G sub base saw a modest addition of ~1.5 mn QoQ to 106.1 million. Even the post-paid sub base at 21.2 mn was down by 0.3 mn QoQ, clearly reflecting the weak competitive positioning. We note that ARPU growth of 4.4% QoQ, was largely owing to benign base of Q1, wherein recharge unavailability and extension had led to decline. Similarly, capex at | 1040 crore (vs. ~| 600 crore) was underwhelming, considering coverage/capacity...

Vodafone Idea (VIL)'s adjusted EBITDA (pre-Ind-AS 116) was up 6% QoQ to INR16.3b. Revenue edged up 1% QoQ (in-line) and ARPU improved 4%, offset by continued subscriber churn. With ballooned net debt of INR1,145b (incl. AGR liability) and meager INR17b quarterly EBITDA (3QFY21 pre-Ind-AS 116), we maintain VIL Under Review until there is further clarity on the liquidity situation improving. Financials & Valuations (INR b)...

Further cost optimisations, coupled with higher ARPUs backed by higher prices, and a probable equity infusion is required to support company's survival in the coming months. We reiterate our HOLD rating with a revised TP of Rs. 9.3 based on 7.3x FY22E EV/EBITDA. EBITDA rises, bottom-line continues to be in red on provisions Q1FY21 revenue dropped 5.4% YoY to Rs. 10,659cr, primarily due to erosion of subscriber base and the consequent decline in ARPU. On the other hand, EBITDA grew 12.3% YoY to Rs. 4,098cr, as EBITDA margins expanded 540bps YoY to 38.4% owing...

Weakness was seen across KPIs. ARPU decline of ~6% QoQ, vis--vis peers who reported ARPU growth, was owing to extension of validity of low cost customers during lockdown, SIM consolidation by its customers and postpaid sub base decline. The subscriber base fell by 11.3 million to 279.8 mn. The 4G sub base saw a modest decline of ~1 mn QoQ to 104.6 mn, clearly reflecting pressure on its high paying customers. Even the post-paid sub base at 21.5 mn was down by 1.5 mn QoQ, owing to fall in POS connections where SIM was requested to be put in safe custody by customers. Cost rationalisation plan of | 4000 crore in next 18 months...