Vodafone Idea shares took a significant hit on Friday, plunging over 5% to touch a 52-week low. The stock fell below the ₹10 mark, closing at ₹9.79 per share on the NSE.
This marks a 5.68% drop for the day, further extending the downward trajectory that began in the previous session. Over the past two days, the stock has lost more than 24% of its value.
The sharp decline follows a Supreme Court verdict in the Adjusted Gross Revenue (AGR) case, which dealt a substantial blow to the already struggling telecom company.
The Supreme Court upheld its previous decision on the AGR ruling and rejected curative petitions filed by Vodafone Idea and other telecom players, including Airtel, seeking relief.
The ruling means that Vodafone Idea will now be required to pay a significant portion of its non-telecom revenue as part of its AGR dues, a decision that was expected but still had a severe impact on investor confidence.
The AGR case has long been a thorn in the side of Indian telecom operators, with Vodafone Idea being one of the most severely affected. The company already faces a mountain of debt, and the Supreme Court’s decision further worsens its financial situation.
The total AGR dues for Vodafone Idea are estimated to be around ₹70,000 crore. This latest setback has compounded fears over the company’s ability to meet its financial obligations, prompting a sell-off by investors.
Nuvama Institutional Equities, a brokerage firm, highlighted that the Supreme Court’s rejection of the curative petition removes any remaining hope of a liability waiver for Vodafone Idea.
While the market had anticipated some bad news, the extent of the stock’s decline reflects the gravity of the situation. Nuvama also pointed out that Vodafone Idea’s future hinges on three critical factors: capital infusion, tariff hikes, and a waiver of liabilities. With the Supreme Court ruling, one of those pillars—liability relief—is now off the table.
Nuvama’s analysis noted that while the first two requirements for Vodafone Idea’s survival—capital infusion and tariff hikes—have been partially met, the company’s long-term viability remains in question.
The brokerage firm revised its target price for Vodafone Idea shares, cutting it from ₹16.5 per share to ₹11.5 per share. The revision incorporates the full AGR liability of ₹70,000 crore, whereas earlier estimates had only factored in 50% of that liability.
Despite this, Nuvama has maintained its ‘Hold’ rating on the stock, implying that investors should refrain from selling but should also not expect significant upside in the near term.
At 10:15 a.m. on Friday, Vodafone Idea shares were trading 3.95% lower at ₹9.97 per share. The company’s stock has been under consistent pressure since the AGR ruling in 2019, and this latest Supreme Court decision has reignited concerns about its future.
Some market observers have pointed out that Vodafone Idea’s situation is further complicated by its ongoing loss of subscribers, slow progress on tariff hikes, and the need for significant capital expenditure to upgrade its network infrastructure.
The ruling also impacts the broader telecom industry in India, but Vodafone Idea appears to be the hardest hit. Unlike its competitors, such as Reliance Jio and Bharti Airtel, which have managed to stay financially strong and adapt to the evolving regulatory landscape, Vodafone Idea has struggled with mounting debt and operational challenges.
The AGR ruling essentially requires telecom operators to pay dues based on their total revenue, including non-telecom income, rather than just telecom revenue. This interpretation of AGR has left companies like Vodafone Idea grappling with massive financial liabilities.
The company’s inability to secure relief through the Supreme Court’s curative petition has further dampened investor sentiment, as there are now fewer options for the telecom giant to mitigate its financial troubles.
The coming weeks will likely be crucial for Vodafone Idea as the company continues to work on its turnaround strategy. While tariff hikes and some capital infusion have provided temporary relief, the long-term outlook remains uncertain.
Industry experts are watching closely to see how Vodafone Idea navigates these challenges, particularly in terms of subscriber retention and network expansion, both of which are essential for the company to stay competitive in the Indian telecom market.
For now, the stock remains under pressure, with analysts predicting a challenging road ahead for the telecom operator. As of Friday, Vodafone Idea’s stock is trading just under ₹10, marking a steep decline from its recent highs and reflecting the broader concerns about the company’s future in an increasingly competitive and capital-intensive market.
