Vodafone Idea - Q2FY21 Result Update - ICICI Securities

Vodafone Idea's (VIL) Q2FY21 performance was a repeat of its continued weakness in terms of subscriber churn, lag in 4G network and balance sheet stress. Reported revenues were up 1.2% QoQ to Rs. 10791 crore, impacted by subscriber base declined by ~8 million to 271.8, with churn rate increasing to 2.6% (vs 2.0% in Q1FY21). ARPU grew ~4.4% QoQ to Rs. 119. Reported EBITDA margins were up 10 bps QoQ to 38.5% on account of one-off credit worth ~Rs. 300 crore along with partial realisation of cost savings programme. The reported loss at Rs. 7218 crore, was accentuated by higher interest costs and one-off exceptional items of Rs. 767 crore (towards integration related, provision for additional depreciation and one-time spectrum charges).

Valuation & Outlook

VIL is the weakest private telco. While AGR extension is a short-term breather, its survival hinges on quick capital infusion and tariff hike/floor tariff implementation. The need for capitalisation is of paramount importance mainly due to its lagging spends on network, coverage gaps and continued churn. We maintain SELL with DCF based target price of Rs. 6/share. We will monitor triggers such as fund raise and tariff hike, before changing stance.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_VodafoneIdea_Q2FY21.pdf

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

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