Vodafone Idea Ltd.’s shares tumbled after its third-quarter earnings missed estimates. The outlook on the way ahead for the company is awaited as the management commentary will come in the earnings conference call which will take place at 2:30 p.m. today.
The revenue was up 1.7% to Rs 11,117 crore against Rs 10,932.3 crore. The Bloomberg estimate was at Rs 11,363.3 crore. The company’s Ebitda saw an uptick of 3.6% to Rs 4,712.4 crore versus Rs 4,549.9 crore, compared to Bloomberg estimates of Rs 4,808.4 crore.
The margin expanded to 42.4% versus 41.6%, against an estimate of 42.3%. The net loss stood at Rs 6,609 crore versus loss of Rs 7,175.9 crore. The estimated loss was Rs 6,890.3 crore. The average revenue per user increased to Rs 173 from Rs 166.
Brokerages like UBS and JP Morgan are counting on capex to accelerate growth in the fourth quarter. The concerns around subscriber loss and the average revenue per user lagging behind peers like Airtel and Jio remain. UBS, JP Morgan and CLSA have maintained their rating on the company but are awaiting cues to determine the way ahead for the company.
Brokerage Views
UBS maintains ‘buy’ with a target price of Rs 13. It said that the results were in line with estimates but the net loss was slightly more than expected. It noted that the impact of tariff hike was residual flow that helped increased average revenue per user.
Further, the current capex growth implies further growth, according to the brokerage. UBS is awaiting cues from management commentary on capex, 5G services and other important cues like raising planned debt.
CLSA maintains its ‘Underperform’ rating with a target price of Rs 6. It notes that the revenue in the third quarter was 1% below estimates. While the ARPU saw 12% higher than expected.
What remains a concern for CLSA is that despite this uptick, VI’s ARPU still lags behind when compared to peers like Jio and Airtel. CLSA also notes a higher than expected subscriber loss for VI.
The brokerage cities high government debt that the company has with further plans to raise debt. Further cues on this are expected today.
JP Morgan is counting on capex for boosted acceleration in the fourth quarter. There is a miss on both revenue and Ebitda from the brokerage’s estimates.
The increase in both broadband sites and 4G network is cited as key positive by the brokerage. While the subscriber decline of 2.5% remains a solid concern. It is awaiting management commentary for cues and signals of the way ahead.
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