Centrum Broking has recommended selling Vodafone Idea shares with a target price of Rs 11. The company showed mixed results for the quarter, with revenue dropping 0.9% from the previous quarter and 1.4% from last year. This decline was mainly due to a decrease in the number of subscribers by 2.5 million, bringing the total down to 210.1 million. The average revenue per user (ARPU) remained flat at Rs 146. Additionally, the number of new 4G users was low, with only 0.4 million added, making the total 4G user base 126.7 million.
Vodafone Idea’s EBITDA margin, a measure of profitability, also dropped slightly to 40%, due to higher network operating costs. However, the company’s net loss improved to Rs 64.3 billion, down from Rs 76.7 billion in the previous quarter, thanks to lower depreciation and interest expenses. Vodafone Idea’s net debt decreased slightly to Rs 1,962 billion from Rs 2,074 billion, following a fundraising effort.
The company is planning significant capital expenditure (capex) of Rs 500-550 billion over the next three years to improve its 4G network and roll out 5G services in key areas. This investment is expected to reduce customer churn and support revenue growth. However, Centrum Broking has lowered its EBITDA estimates for FY25 and FY26 by 3.9% and 1.4%, respectively, and maintains its “Sell” rating with an unchanged target price of Rs 11 per share.
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