The share price of Vodafone Idea fell another three percent on Tuesday after the company reported weak earnings for the quarter ended June 2021.
The debt-ridden telecom operator reported a consolidated loss of Rs 7,319.1 crore, while its revenue from operations declined by about 14 percent YoY to Rs 9,152.3 crore.
The company's total debt in Q1FY22 stood at Rs 1.91 lakh crore.
Brokerages reduced their target price on the stock amid the deteriorating financial position of the company and uncertainty over fundraising.
Global brokerage CLSA said Vodafone Idea’s (VIdea) Q1FY22 revenue was below its estimate due to a higher-than-expected 12.4 million decline in subscribers during the second wave of Covid-19.
"Ebitda was down 16 percent QoQ despite VIdea having achieved 70 percent of its target Opex efficiency. We cut our FY22-23CL forecasts between five percent (FY23CL revenue) and 12 percent (FY22CL Ebitda), though management said operations normalised in 2QFY22," CLSA said.
VIdea’s debt burden is huge at $25.8 billion, and it is headed for a financial crisis when annual payments are due, CLSA added.
The brokerage reduced the target price to Rs six per share from Rs 10 earlier and retain an 'underperform' rating.
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Credit Suisse also maintained an 'underperform' rating and cut the target to Rs four from Rs six as the company had reported an "all-round weak quarter."
The brokerage believes there is a need for meaningful capital infusion and strong operational improvement for the company to become competitive.
UBS said that the subscriber market share loss continued, while the impact of Covid added to its woes. The company remains in a critical position in terms of liquidity and FY22 cash flows were not sufficient to meet upcoming repayment obligations, it added.
It believes the progress in fundraising exercise and potential relief package from the government will be key for the company going ahead.
UBS has a 'neutral' call with a target of Rs 10 per share.
At 11:30 am, the shares of Vodafone Idea were trading 3.35 percent lower at Rs 5.77 apiece on the BSE.
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