Vodafone Idea (Vi) is going to see its shares slide 60% from the current levels, believes JP Morgan. The brokerage firm has set a target price of Rs 3 for Vi. This is because there are structural issues in the company. It is worth noting that the telco announced its Q3 FY23 financial results on Tuesday, where it reported a net loss of Rs 7900 crore or approximately $1 billion USD. The telecom giant's ARPU (average revenue per user) figure stood at Rs 135, the lowest in the industry amongst the private telcos.
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At the time of writing this (2:07 PM), the telco's shares are trading at Rs 7.70, the same figure where it closed on Tuesday. Vi's ARPU growth doesn't do much good, as it was offset by the decline in the number of active subscribers. The stock of Vi had recovered a little post the announcement of the conversion of interest dues into equity for the government.
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JP Morgan said that the key driver for the stock of VIL (Vodafone Idea Limited) would be the refinancing of debt and equity infusion in the medium term. The Aditya Birla Group has promised the government that it would bring the necessary investments for Vodafone Idea. The telco was also of the view that it couldn't raise additional capital from the investors because the government was delaying the interest-to-equity conversion. Now all the eyes would be on when and if Vi raises fresh capital.
The Economic Times recently published a report saying that the Aditya Birla Group is already looking to raise capital for the telco at the promoter level and is in talks with global lenders for the same. Akshaya Moondra, CEO of Vi, said that they are actively in talks to raise capital via both equity and debt.
