Vodafone Idea Shares Gain 2% After JM Financial Maintains ‘Add’, Raises Target to ₹12.50

Shares of Vodafone Idea gained nearly 2% after JM Financial, in its telecom sector preview, maintained an ‘Add’ for the stock raising its target price to ₹12.50 from ₹11.50, citing gradual ARPU improvement despite continued subscriber churn.  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 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.

Vodafone Group has also set aside its 328 crore shares held in Vi for Vi's benefit. Vi will have the right to instruct Vodafone to sell these shares, in one or more tranches, with any cash proceeds being transferred to Vi.As of the date of the amendment agreement, the market value of the earmarked shares stands at ₹3,529 crore, the Vi filing said.A Contingent Liability Adjustment Mechanism (CLAM) was entered into between Vodafone Group and Vodafone Idea (Vi) at the time of the 2017 merger agreement between Vodafone India and Idea Cellular and covers pre-merger contingent liabilities in relation to legal, regulatory, tax, and other matters of the two merging parties.Under the CLAM, Vodafone's maximum exposure was capped at ₹8,369 crore at the time of the merger, and taking into account payments already made, the reduced exposure was capped at ₹6,394 crore, and the deadline for the pact after an extension was December 31, 2025.

For the December quarter, the brokerage expects a largely flat sequential performance. Net subscriber losses of about 35 lakh are expected to offset a modest 1.1% quarter-on-quarter rise in ARPU to ₹169, even as the company adds around 5 lakh mobile broadband users. Revenue is projected to remain steady at roughly ₹11,200 crore, with reported EBITDA also seen flat at around ₹4,700 crore. Pre-Ind AS (cash) EBITDA is expected to edge up slightly to ₹2,260 crore, while the net loss for the quarter is estimated at ₹6,986 crore.

Meanwhile, Vodafone Idea’s promoters have taken steps to resolve legacy liabilities stemming from the 2017 Vodafone India–Idea Cellular merger. Promoter entities have earmarked 3.28 billion equity shares, valued at ₹3,529 crore and accounting for about 3.03% of the company’s total equity, to clear outstanding dues. The arrangement involves three Vodafone Group promoter entities, offering a structured route to address past obligations. Looking ahead, analysts caution that the stock is likely to remain volatile. Vodafone Idea’s long-term prospects hinge on its ability to raise fresh capital expenditure funding, stem subscriber losses, and regain market share in an intensely competitive telecom market dominated by financially stronger rivals. The stock has gained over 35% in the past year, 51% over six months, 32% in three months, and 13% in the last month.