Vodafone Idea Shares Bounce Back 7.5% from 52-Week Low – Nuvama Predicts 40% Surge

Vodafone Idea share price: After a steep drop due to the Supreme Court’s decision on AGR dues, Vodafone Idea shares hit a new 52-week low of ₹9.79 last week. However, the stock recovered, ending at ₹10.52, up by 7.50%.

According to Nuvama, a global brokerage firm, the market hadn’t considered a positive outlook for Vodafone Idea after the Supreme Court’s ruling. But, the fundamentals of the company remain the same, and there could be a sharp recovery in the stock price. Nuvama believes that with the Indian government’s support, Vodafone Idea can close its funding gap. They predict that the worst is over, and the stock could reach ₹15 per share in the medium to long term.

Key factors driving Vodafone Idea shares

The Supreme Court recently rejected Vodafone Idea’s curative petition regarding their AGR dues of ₹70,300 crore. The company’s stock dropped by 20% following this decision as investors had expected a reduction in the dues. Nuvama, however, had not factored in any such reduction, as the court’s previous stance was clear.

Government support is crucial

Nuvama also stated that Vodafone Idea is expected to generate ₹224 billion in EBITDA by FY26. This income will help the company pay off part of its government dues, which total ₹290 billion. Vodafone Idea may convert ₹120 billion of these dues into equity, with the rest being covered by their earnings. By FY27, the company expects to generate ₹261 billion in EBITDA, which will be used to pay off further government dues.

Has Vodafone Idea overcome the worst?

Nuvama suggests that the AGR dues were a major issue for Vodafone Idea, and now that this has been resolved, there is clearer visibility for the company’s future. Despite its large debt, which will be manageable with government help, Vodafone Idea is expected to gradually rebuild and participate in the Indian telecom industry’s growth. This includes likely tariff hikes over the next two years and opportunities from 5G.

Nuvama expects Vodafone Idea’s EBITDA to grow by 15% annually from FY24 to FY27. They believe that the recent stock decline presents a buying opportunity, as the worst is behind the company.

Vodafone Idea share price target

Nuvama advises investors that they expect Vodafone Idea shares to rise, using a valuation method of EV/EBITDA with a 15x multiple for Sep-26, leading to a target price of ₹15. This represents a potential increase of over 40% from its current price of ₹10.52.