Vodafone Idea Receives Its First Buy Recommendation in a Year; Stocks could rise another 30%
UBS expects Vodafone Idea shares to reach levels of ₹18 over the next 12 months, implying a potential upside of almost 30% from Thursday’s closing levels. However, in a scenario of relief from the government on pending dues, UBS estimates that the stock could rise by almost 70-80%.
The brokerage said the market was expecting a rate hike of between 15% and 20% over the next 12-24 months after the company’s follow-on public offering (FPO) closes. Vodafone Idea has raised ₹18,000 crore in the country’s largest FPO to date. UBS had previously forecast a 10% rate increase in the first quarter of fiscal 2025.
Vodafone Idea is also likely to receive revenue in the form of reduction in AGR from the Supreme Court or the government converting its dues into shares or some form of moratorium, according to UBS. He underlines this point by drawing on the government’s objective of ensuring the viability of three private telecommunications companies.
Although Vodafone Idea is most tapped for such relief, according to UBS’s note, the stock trades at nearly 11 times FY2026 enterprise value to EBITDA, similar to Bharti Airtel and Reliance Jio.
Vodafone Idea recently came under scrutiny after Nuvama Alternative and Quantitative Research touted the stock as a potential inclusion in the MSCI index in its upcoming review in August. The brokerage expects inclusion in the MSCI Global Standard Index and expects potential inflows of $212 million if that materializes.
Last week, brokerage firm Kotak Institutional Equities maintained its ‘sell’ rating on the stock, but said the shares could reach ₹23 in its bullish scenario.
Vodafone Idea also came out of the F&O ban today, which means new positions can be created in the stock.
Shares of Vodafone Idea ended 4% higher on Thursday and have doubled in the last 12 months.
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