Vodafone Idea Share Price: Vodafone Idea shares were trading at Rs 8.40 on the NSE and were down nearly 2 per cent on Friday after the company’s September quarter results failed to impress the street. The company reported a net loss of Rs 7,595.50 crore for July-September which was up 4 per cent sequentially.
However, the revenue rose about 2 per cent sequentially to Rs 10,615 crore and was higher than the estimated Rs 10,591 crore. Operating profit in the quarter declined by more than 5 per cent sequentially to Rs 4,098 crore as expenses went through the roof. Expenses for the saddled operator rose at a faster pace than sales at nearly 3 per cent quarter-on-quarter (QoQ).
Operating margin of the company shrunk by 297 basis points sequentially to 38.61 per cent. While its cash and equivalents at the end of September stood at Rs 190 crore.
Average revenue per user (ARPU) improved to Rs 131, up 2.3 per cent quarter-on-quarter from Rs 128 in Q1 of FY23.
The company lost six million subscribers sequentially and its user base stood at 234.4 million at the end of the second quarter.
However, the 4G customer count grew by 1.6 million sequentially to 120.6 million.
Data consumption by 4G customers increased sequentially by 4.6 per cent to 15 GB/month.
Vi has been struggling operationally and financially and previous rating downgrades have resulted in an increase in finance costs.
Certain vendors have asked for an immediate repayment of their outstanding dues and the company’s ability to continue as a going concern remains dependent on fund raising and successful negotiations with vendors.
“As on date the group has met all its debt obligations,” Vi said.
Gross debt as of the end of September stood at Rs 2.2 trillion, comprising deferred spectrum liabilities and bank borrowings.
Spectrum liabilities have increased due to the recently acquired spectrum, and Vi has reduced its bank debt sequentially.
While rival firms Airtel and Jio have rolled out 5G service, Vi is yet to finalise its contracts for 5G network equipment. In a statement, Vi Chief Executive Officer Akshaya Moondra said the company was engaged with lenders and investors regarding further fund raising for network expansion and the 5G roll-out. Moondra said the company reported a fifth consecutive quarter of revenue growth and 4G subscriber addition.
What Should Vi Investors Do Now?
Goldman Sachs has cut its target on Vodafone Idea from Rs 2.60 to Rs 2.50 per share and recommended a Sell on this stock, a view also echoed by technical analyst Nilesh Jain.
Analyst Nilesh Jain sees a further downside in this stock citing a weak chart structure in the stock. He expects prices to fall between Rs 8 and Rs 7.50. He suggested a Sell on rise strategy in Vi shares.
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