Nomura Downgrades
Brokerage firm Nomura has downgraded Vodafone Idea to a “neutral” rating from its earlier rating of “buy” but raised its price target to ₹12.6 from their earlier target of ₹10.
Nomura said that the warrant issue to promoters may help Vodafone Idea raise its debt capital, while subscriber addition and Average Revenue Per User (ARPU) trends remain the key factors to watch.
The brokerage goes on to highlight four key catalysts for Vodafone Idea. They include:
- A successful debt capital raise
- Industry tariff hikes
- A reversal of the subscriber loss trend
- and strategic equity investment which may provide the much-needed confidence capital.
A slowdown in subscriber addition and / or ARPU growth that disappoints investors are some key risks highlighted by Nomura in its note, adding that such a scenario could push the stock back into bear territory.
CLSA Downgrades But Raises Target
CLSA has also downgraded the stock to “hold” from its earlier “outperform” rating, but raised its price target to ₹13 from ₹11 earlier.The brokerage also highlighted the company approving warrants issue to the Birla Group at ₹11 per share, adding that the company is engaging in securing debt funding for a planned ₹45,000 crore investment.
Another Downgrade
The third downgrade came from ICICI Securities, which cut its recommendation to “reduce” from its earlier rating of “hold”, and tweaked its price target to ₹11 from the earlier target of ₹10.Only three out of the 21 analysts tracking Vodafone Idea now have a “buy” rating on the stock after the recent downgrades, seven have a “hold” rating and 11 have a “sell” rating on the stock.
Shares of Vodafone Idea ended 0.2% higher on Monday at ₹12.98. The stock is up 37% over the last one month.
