'Sell' Vodafone Idea Shares Maintains Motilal Oswal Despite Inline Q1; Sees 8% Downside

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Motilal Oswal Report

Despite equity infusion and acceleration in the network capex, Vodafone Idea Ltd. continues to lose market share to peers due to lower average revenue per user translation from tariff hikes, given its inferior subscriber mix and elevated subscriber churn.

While Vodafone Idea’s subscriber losses have moderated further in Q1 FY26, we believe that without the closure of its debt raise, Vodafone Idea’s plans for a significant capex cycle (Rs 500-550 billion over the next two-three years) remain in jeopardy, potentially resulting in elevated churn going ahead.

Further, as we have argued earlier, tariff hikes do not benefit Vodafone Idea as much as its peers. We note, Vodafone Idea’s revenue grew at a modest ~6% YoY, or an annualized increase of ~Rs 22 billion, vs ~Rs 195/140 billion for Bharti Airtel/Reliance Jio).

In the absence of a relief on AGR dues (~Rs 164 billion annual repayments starting Mar’26) and closure of debt raise, Vodafone Idea’s planned capex of Rs 500-550 billion remains in jeopardy, potentially resulting in higher subscriber churns.

We cut our FY27-28E revenue and Ebitda estimates by ~4-5% each, driven by higher subscriber declines. We reiterate our Sell rating on Vodafone Idea with a revised target price of Rs 6, based on DCF implied ~12.5x Sep’27E EV/Ebitda.

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