World brokerage agency Citi has a ‘Purchase (Excessive Danger)’ score on Vodafone Thought, with a worth goal of Rs 12. In its analysis report dated April 13, 2025, the agency famous that the federal government’s current conversion of Rs 36,950 crore in Vi’s spectrum dues into fairness—leading to a 49 % stake—may present a lift to the corporate’s pending Rs 25,000 crore debt increase.
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Annual Dues to the Authorities Considerably Lowered
“The investment-grade credit standing ought to, in our view, present a significant enhance to Vi’s efforts to finish its long-delayed financial institution debt increase, as that is sometimes one of many key necessities for banks to offer lending,” Citi Analysis stated.
The brokerage added that following the fairness conversion, Vi’s annual dues to the federal government (spectrum and adjusted gross income) for FY26, FY27, and FY28E are actually diminished to round Rs 19,000 crore, Rs 23,000 crore, and Rs 32,000 crore respectively, down from roughly Rs 30,000 crore, Rs 43,000 crore, and Rs 43,000 crore earlier.
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Assuming Fundraise of Rs 25,000
“Assuming VI have been to achieve closing out its Rs 25000 crore financial institution debt funding, which is essential for the corporate’s deliberate capex, we estimate no money shortfall in FY26E however a possible shortfall in FY27E (primarily because of the excessive AGR quantity payable of Rs 16500 crore every year). Vi stays in discussions with the federal government for potential aid on the latter,” Citi Analysis stated.
“With the corporate now coming again into the funding grade score, which is the requirement for the banks to offer funding, the debt funding discussions ought to now progress in the suitable path,” a Vi spokesperson instructed ETTelecom in a written response.
ICRA Revises Ranking
Following the federal government’s fairness conversion, credit standing company ICRA has assigned Vi an investment-grade score of BBB-. Vi’s final improve was in June 2024, when CARE Rankings raised its score from B+ to BB+, following the profitable completion of its Rs 18,000 crore FPO.
Vodafone Thought, in an change submitting on April 11, stated: “ICRA Restricted, has assigned BBB- (Secure) score to the Lengthy-Time period Fund Primarily based Amenities of the Firm as per the score letter issued to the Firm as we speak (i.e. on April 11, 2025).”
“We consider the current fairness conversion by the federal government and the next credit standing improve to investment-grade are two materials positives for Vi, growing the chance of the corporate finishing its pending Rs 25000 crore debt increase,” the brokerage agency stated.
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It added {that a} profitable fundraise would even be a key catalyst for Indus Towers by lifting considerations surrounding new tenancies from VI and its future money circulate scenario.
Earlier this month, the federal government agreed to transform Rs 36,950 crore of Vi’s excellent spectrum dues into fairness, elevating its stake within the telecom firm from 22.6 % to 48.99 %.
So, What Are the Dangers for Vi?
Citi has rated Vi as a high-risk funding, citing the corporate’s over-leveraged steadiness sheet. Continued authorities assist stays vital, particularly with the sharp rise in authorities debt repayments that may turn out to be due from Oct 2025, as soon as the continuing moratorium ends and likewise as the opportunity of AGR aid has gone following the dismissal of the corporate’s healing petition by the Supreme Court docket.
Additionally Learn: Macquarie Downgrades Vodafone Thought on Recent Govt Fairness Infusion: Report
Citi additionally famous that disappointing future tariff hikes may stop the inventory from reaching the goal worth. Different dangers embrace a slower-than-expected tempo of 4G subscriber additions, delays in 5G rollout, and higher-than-expected dilution if the federal government converts further dues into fairness.
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