Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Vodafone Idea Ltd - With AGR case behind, can VIL bounce back? - ICICI Securities

Posted On: 2020-10-30 08:25:25


Vodafone Idea's (VIL) Q2FY21 adjusted cash EBITDA at Rs16bn was broadly in line with our estimates. However, it was no show for VIL in Q2FY21 with subs decline of 8mn, 4G net add at a meagre 1.5mn, and drop in minutes and data usage. With the AGR case behind, VIL will need to bounce back stronger, with limited resources, to remain a going concern. Capex for VIL is contingent on fund raising and any delay may hurt it further. Company requires tariff hike sooner rather than later to boost operational cashflow, and we see it likely to initiate tariff hikes, which should be followed by competition (same as Dec'19). We have cut our EBITDA estimates by 14% / 11% for FY21E and FY22E on weak Q2 numbers. We roll-over our valuations to FY23E and cut EBITDA multiple to 10.5x (from 11.5x); accordingly, our fair value dips to Rs5 (from Rs6). Maintain SELL.

- With AGR case behind, the key variables to watch: Management bandwidth should have gone into the AGR case, which is now behind. Company's public statement of likely shutdown should have hurt channel partners, hence slippage in execution is understandable. But, VIL would need to show strong execution hereon, with limited resources, if it has to survive. It need to expand gross subs add (14mn in Q2FY21 vs run rate of 22mn-24mn) and strong 4G net adds. We will also like to see rise in customer engagement (mins have declined since the Voda-Idea merger) and data usage growth.

- Revenues up 1.2% QoQ to Rs108bn (vs Bharti's mobile revenues at +7.4%). Revenues for VIL were impacted by 8mn subs loss to 272mn and lower 4G net add of just 1.5mn to 106mn. Revenue growth is particularly disappointing considering it declined sharply in the previous quarter by 9.3% on non-availability of recharges, which has only partly come back. Further, the company's ARPU rose 4.4% QoQ to Rs119 on loss of low-ARPU subs. VIL also lost 0.3mn postpaid subs to 21.3mn. Customer engagement was unimpressive with minute decline of 4.1% QoQ to 555bn, and data usage dip of 4% QoQ to 4,340-bn MB.

- Cash EBITDA (adjusted for Ind-AS 116) at Rs19bn. EBITDA at Rs41bn came 9% higher than our estimate due to a one-off benefit of Rs3bn. Adjusted for Ind-AS 116 and the one-off, EBITDA was Rs16.3bn (in-line) vs Rs15.3bn in Q1FY21. Selling & marketing costs increased 15.9% QoQ probably on re-branding. VIL has already achieved Rs10bn of annualised savings out of the guided Rs40bn additional synergy benefits. Finance cost rose 23.6% QoQ to Rs47bn on inclusion of interest on AGR dues. Net loss stood at Rs72bn.

- Net debt including AGR dues at Rs1,721bn. VIL's capex is still low at Rs10bn likely due to cash crunch. Net debt has dipped by Rs10bn to Rs1,145bn on lower capex and moratorium on interest payment. Including AGR dues of Rs576bn, total net debt is Rs1,721bn, which is unsustainable. Company has taken Board approval for Rs250bn fund raising with a mix of debt and equity. We believe equity infusion is critical as it would allow the company to invest in network.

Shares of Vodafone Idea Ltd was last trading in BSE at Rs.8.75 as compared to the previous close of Rs. 8.38. The total number of shares traded during the day was 93918936 in over 146656 trades.

The stock hit an intraday high of Rs. 8.92 and intraday low of 8. The net turnover during the day was Rs. 808968853.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com



Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking

Metropolis Healthcare - Nov 25, 2020 - Angel Broking

NTPC - Showcase of strength & competitiveness - ICICI Securities

Telecom - Market Share TRACKER - Bharti is narrowing the gap on incremental market share vs RJio - ICICI Securities

Cochin Shipyard - Q2FY21 Result Update - ICICI Direct

Engineers India - Q2FY21 Result Update - ICICI Direct

Rupee - Nov 24, 2020 - Reliance Securities

FMCG Sector Update - Recovery unlocked; lower growth divergence - HDFC Securities

Engineers India - Consultancy segment outperformance - ICICI Securities

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Motherson Sumi Systems - Company Update - Virtual Investor Conference - ICICI Direct

Mutual Fund Review - November, 2020 - ICICI Direct

Sadbhav Engineering - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

Vodafone Idea fund raising - Angel Broking

Rupee - Nov 23, 2020 - Reliance Securities

Crude Oil - Nov 23, 2020 - Reliance Securities

Q2FY21 Bank Result Quick Review - Angel Broking

Banks & NBFC's Sector Update Report - Yet another watershed moment? - HDFC Securities

Galaxy Surfactants - EBITDA/kg has an upside risk - ICICI Securities

Diagnostics - COVID-19 tests continue to trend higher - ICICI Securities

Banking & Financial Services - Sector Update - Nov 22, 2020 - ICICI Direct

Dalmia Bharat Sugar - Q2FY21 Company Update - ICICI Direct

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Covid Recovery Pulse - Festive positivity continues in auto retails, E-way bill generation improves... - ICICI Direct

Quant Pick - Exide Industries - ICICI Direct

Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Triveni Engineering - Q2FY21 Company Update - ICICI Direct

Initiating Coverage on Sudarshan Chemical - Leaping into the league of giants - HDFC Securities

Earnings Wrap Q2FY21: Earnings outperform, post Covid recovery picks up steam - ICICI Direct

Vodafone Idea Positive development beneficial for IDFC first bank - Angel Broking

Lakshmi Vilas Bank - Angel Broking



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019