The stock has been under pressure of late as analysts believe Vodafone Idea's liabilities are much higher than what its profit & loss (P&L) permits. They believe government support is a must for the debt-ridden operator to stay afloat. Out of 20 analysts tracking the stock, 9 have 'sell' rating, while 4 others have 'strong sell' rating on the telco. There are six 'hold' calls and just one buy call on the counter.
Analysts largely have targets in Rs 4-6 range for the stock.
On Friday, the scrip was quoting at Rs 6.17, down 4.34 per cent.
"We believe the existing operation is unlikely to meet upcoming payouts, and risk of default cannot be ruled out, the much-anticipated tariff hike/s and capital infusion have been insufficient," said ICICI Securities.
This brokerage has changed its stance to 'under review' from 'sell' and said its previous target price of Rs 5 stands suspended.
With the delay in capital raise, Vodafone Idea's situation has considerably worsened and government intervention will be required to sustain the market structure, said Edelweiss Securities.
"This can be resolved only with significant tariff hikes and capital raise. Meaningful ARPU improvement can be achieved only with a tariff hike in pre-paid plans offering significant daily data allowance. Since all operators may not intend to raise prices, regulatory intervention may be needed. We revise down FY22 revenue estimate by 5.6 per cent and FY23 by 1.7 per cent," it said while revising its target to Rs 4 due to uncertainty.
Vodafone Idea tanks 5% despite clarification on licence fee - Economic Times
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