Vodafone Idea share price plunges over 10% after Q4 results

The average revenue per user (ARPU) for Q4FY21 fell to Rs 107 as compared to Rs 121 in Q3FY21, on account of the removal of interconnect usage charges (IUC), adjusting for which ARPU was broadly flat this quarter.

Vodafone Idea’s net debt stood at Rs 1.8 lakh crore at the end of FY21. The company said that its inability to raise funds and the present financial condition has put a question mark on their ability to service debt and pay AGR and spectrum dues.

“With $24 billion in debt, of which 88 percent is for spectrum, its AGR is headed for a financial crisis when annual payments come due. Ahead of VIdea’s potential $ three billion in annual cash outgo, inevitable is a review of AGR and tariff hikes, or the sector is headed toward a duopoly,” global brokerage firm CLSA said.

Adjusting its estimates, CLSA lifts its target price on the stock to Rs 10 per share from Rs 9 earlier.

Goldman Sachs noted that Vodafone Idea lost another 130 bps of revenue market share in the March quarter. Cumulative revenue market share loss was at 630 bps in the last 12 months.

“The company has large repayments due starting December 2021 and may have a Rs 23,400 crore cash shortfall until April 2022. Capex is likely to remain under pressure resulting in continued market share loss, Goldman Sachs said.

It has a ‘sell’ call on the stock with a target price of Rs three per share.

At 9:55 am, the shares of Vodafone Idea were trading 6.33 percent lower at Rs 9.32 apiece on the BSE.