Telecom operator Vodafone Idea in its earnings call said that its equity fund raising exercise will conclude in the December quarter and debt funding will follow. The management said that fund raising discussions have gathered steam over the last 1-2 months.
The company said that the September quarter may see some benefits from raising the entry-level pack price in 12 circles towards the end of the June quarter, although it does see some SIM consolidation.
It also expects the payout burden to ease significantly after bunched up debt repayments and spectrum payouts in the September quarter.
The Aditya Birla Group company expects capex to remain at the same level until the fund raising exercise is complete.
However, the street remains unconvinced of the company's commentary as consensus expects a potential downside of close to 30 percent in Vodafone Idea's share price.
Brokerage firm JPMorgan said that fund raising remains elusive as talks have not yet reached the final stages. While some have moved to the due dilligence stage, nothing has been finalised yet. It expects liquidity constraints to continue impacting network investments on both 4G expansion and 5G rollout.
The brokerage further said that the key driver for the stock post equitisation of part of government debt is debt refinancing and capital infusion in the medium term.
JPMorgan has one of the lowest price targets for Vodafone Idea on the street. It has an underweight rating on the stock with a price target of Rs 3.
CLSA also has a sell rating on the stock with a price target of Rs 7. It termed the company's quarterly results to be below estimates.
Shares of Vodafone Idea have been flat this year so far, declining close to 2 percent. None of the 18 analysts that track the stock have a buy rating on it. Three have a hold recommendation, while the other 15 have recommended their clients to sell the stock.
