Shares of Vodafone Idea declined for a second consecutive session as brokerages expect the telecom operator to report a largely flat performance in the Q3 earnings. Unlike peers Bharti Airtel and Reliance Jio, which are seen delivering sequential revenue growth, Vodafone Idea continues to face challenges from ongoing subscriber losses and limited revenue momentum. Market sentiment around the stock remains cautious despite the positive developments.
The stock which gained 2% yesterday after JM Financial, in its telecom sector preview, maintained an ‘Add’ for the stock today witnessed a decline and is currently trading at Rs.11.56 against the previous close of Rs.11.59. The debt laden telecom company is also set to receive around ₹5,836 crore from Vodafone Group as part of the resettlement of a liability claim pact between the two companies, according to regulatory filings of both companies.Under the revised agreement, Vodafone Group promoters will release ₹2,307 crore over the next 12 months for Vodafone Idea as per the terms agreed in the amendment agreement. Milan Vaishnav, MSTA, Founder of Gemstone Equity Research & Advisory Services in a moneycontrol report has advised investors to avoid Vodafone Idea and use any upward moves to exit the stock. “If investors choose to remain invested, exposure should be limited to no more than 5 percent of the total portfolio,” he added.
Continuing further he said, it is not possible to analyze Vodafone Idea purely from a technical perspective. The main drivers of its price over past many quarters is the developments on AGR dues and the rulings from the court that have come from time to time. The stock has rising over the past quarter despite negative divergences on the lead indicators.In my opinion, investors should avoid this stock and use all up moves to exit the stock. If they wish to stay invested, not more than 5 percent of the total portfolio should be allocated to such stocks.