Shares of Vodafone Idea jumped by 11.6% on Friday after UBS upgraded its rating on the stock from ‘neutral’ to ‘buy’. UBS also increased its price target for the stock to ₹18, suggesting it could rise by more than 19% from Friday’s closing price. The stock finished the day at ₹15.11, up 7.5% from the previous day.
UBS believes the market is expecting a 15-20% increase in mobile tariffs over the next 12-24 months. The brokerage said it is likely that the Supreme Court will reduce AGR dues or the government will provide relief through equity conversion or payment moratoriums. This aligns with the government’s goal of maintaining three strong private telecom companies. UBS believes Vodafone Idea will benefit the most if these changes occur, making it an attractive investment now. UBS kept its ‘neutral’ ratings on Bharti Airtel and Indus Towers.
Analysts and investors have been optimistic about Vodafone Idea since its ₹18,000-crore follow-on public offer (FPO) in April, which was India’s largest and was subscribed 7 times, showing strong interest from global institutional investors. Vodafone Idea, created by merging Aditya Birla Group’s Idea Cellular with Vodafone Plc’s India unit in 2018, had priced the FPO at ₹10-11 per share.
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