Shares of Vodafone Idea surged over 10% on Friday to hit intraday high of Rs 15.70 on NSE, following a notable upgrade by brokerage firm UBS, elevating the telecom service provider’s rating from “neutral” to “buy” — the first such recommendation in almost a year.
UBS projects Vodafone Idea’s shares to reach Rs 18 within the next 12 months, suggesting a potential upside of nearly 30% from Thursday’s closing levels. Additionally, in the event of governmental relief on pending dues, UBS envisions a substantial 70% to 80% upside potential for the stock.
The brokerage notes that the market is factoring in a tariff hike of 15% to 20% over the next 12-24 months, post the closure of Vodafone Idea Follow-On Public Offer (FPO), through which the company raised Rs 18,000 crore, marking India’s largest FPO to date. Earlier, UBS had forecasted a 10% tariff increase in the first quarter of financial year 2025.
Furthermore, UBS anticipates potential relief for Vodafone Idea in the form of reduced Adjusted Gross Revenue (AGR) liabilities, possibly through Supreme Court intervention or governmental initiatives such as equity conversion or moratoriums. The firm underscores the government’s aim to maintain three viable private telecom players.
While Vodafone Idea stands to benefit the most from such relief measures, according to UBS, the stock trades at approximately 11 times the Enterprise Value to EBITDA for financial year 2026, akin to Bharti Airtel and Reliance Jio.
Other Brokerages on Vodafone Idea
Recently, Vodafone Idea gained attention after Nuvama Alternative and Quantitative Research highlighted its potential inclusion in the MSCI index during the forthcoming August review. The brokerage foresees an addition to the MSCI Global Standard Index, potentially leading to inflows of $212 million.
Despite the positive sentiment, last week, brokerage firm Kotak Institutional Equities maintained a “sell” rating on the stock, although it acknowledged the potential for shares to rise as high as Rs 23 in its bullish scenario.
Stock Performance in Last One Year
The shares of Vodafone Idea have exhibited mixed performance over various time intervals. In the last month, the stock delivered a positive return of 16.41%. Over the past six months, it demonstrated strong momentum with returns of 14.23%, indicating robust performance.
However, year-to-date returns show a decline of 11%. Despite this, on a broader horizon, Bajaj Auto shares have displayed consistent strength, yielding over 119% in the past year.
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