Vodafone Idea: UBS Sees ‘Attractive’ Opportunity Despite Price Target Cut!
Vodafone Idea: The global brokerage firm UBS has maintained a Buy rating on Vodafone Idea Ltd., despite reducing its price target to ₹13 from ₹19, representing a 32% decrease from previous levels. However, the revised target indicates a potential upside of nearly 50% from Wednesday’s closing levels.
UBS anticipates that the residual benefits of tariff hikes may be offset by a subscriber churn of 3.5 million, resulting in mobile revenue growth of 2.8% quarter-on-quarter. Looking forward, UBS identifies the key driver for Vodafone Idea as the potential relief or deferral of statutory dues (AGR and spectrum liabilities). The firm believes that some form of relief, whether through equity conversion, partial relief, deferral, or a combination of these measures, is still likely.
With Vodafone Idea’s stock trading at comparable valuations to Airtel and Jio (11x EV/EBITDA), UBS views the risk-reward profile as attractive, given the potential upside from relief measures. Among the 22 analysts covering Vodafone Idea, only four have a Buy rating, while 13 recommend selling, and five are neutral.
In a separate note, UBS has upgraded Indus Towers to a Buy rating, setting a price target of ₹425 per share.
UBS has recently upgraded Indus Towers to a Buy rating, setting a price target of ₹425 per share. The brokerage firm is confident in Indus Towers’ ability to exceed expectations in dividend payouts as it transitions from Airtel’s tower rollouts to Vodafone Idea’s network expansion, which requires minimal additional capital expenditure.
Furthermore, UBS pointed out that ongoing payments from Vodafone Idea to settle outstanding debts should allow Indus Towers to continue offering substantial dividends in the future.
In regards to Bharti Airtel, UBS has maintained a Neutral rating with a price target of ₹1,707 per share, indicating a potential 6% increase from the stock’s recent closing price.
Yesterday, Vodafone Idea’s shares climbed 6.60% to reach ₹8.75, while Indus Towers saw a 3.50% increase, closing at ₹352.20. Bharti Airtel’s stock also rose by 0.56% to finish at ₹1,609.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.