Vodafone Idea gets stock targets as low as Rs 3 as analysts flag shrinking subscriber base

Vodafone Idea (Vi) shares suffered losses on Thursday after brokerages reiterated bearish views on the telecom stock flagging its rapidly shrinking subscriber base, Vodafone Idea shares fell as much as three per cent to Rs 7.5 apiece on BSE, having begun the day 0.6 per cent weaker, as analysts lined up targets to the tune of as low as Rs 3 for the stock. 

JPMorgan reiterated its 'underweight' rating on the stock with a target price of Rs 3 — implying a 61.3 per cent downside from Wednesday's closing price. 

The debt-ridden Vodafone Idea — once among the biggest telecom operators in the country — reported its financial results for the quarter ended December 2022 on Tuesday. Vi's net loss loss far exceeded analysts' estimates, though it was the sixth quarter in a row in which the company saw growth in revenue as well as 4G subscribers. 

After market hours on February 14, Vodafone Idea reported a net loss of Rs 7,990 crore for the three-month period, as against a net loss of Rs 7,596 crore for the corresponding period a year ago. The company's revenue was barely up compared with the corresponding period a year ago, at Rs 10,621 crore, according to a regulatory filing. 

Its margin — a key measure of profitability for businesses— improved by 80 basis points on a year-on-year basis to 39.4 per cent. 

Vodafone Idea fell short of analysts' estimates on the topline and bottom-line fronts, but its margin and average revenue per user (ARPU) — a metric that determines the amount of money a telecom operator makes from each of its subscribers — were better than their expectations. 

The government converted interest of Rs 16,133 crore, related to the deferment of spectrum installment and AGR dues, into equity. It now holds a stake of around 33 percent in the company.

Vodafone Idea's overall subscriber base came down to 22.86 crore for the October-December period from 23.44 crore in the previous quarter. Its debt from banks and other financial institutions stood at Rs 13,190 crore.

What brokerages recommend on Vodafone Idea shares after the telecom company's Q3 results

The telecom operator's quarterly revenue as well as EBITDA came in below the estimates of CLSA, which highlighted its contracting subscriber base and rising ARPU. 

The brokerage brought down its earnings forecasts for Vodafone Idea for the three years ending March 2025 by 2-16 per cent. 

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