Vodafone Idea Q3 Results Review — Operationally Weak Says Motilal Oswal And Downgrades The Stock To 'Sell'

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Motilal Oswal Report

Vodafone Idea Ltd. continues to lose market share to peers on account of lower average revenue per user translation, given its inferior subscriber mix and elevated subscriber churn.

Vodafone Idea plans to embark on a significant capex cycle (Rs 500-550 billion over the next two-three years) to bridge the network gap with peers.

Despite the likely capex, we believe gaining back subscribers would be a tall ask for Vodafone Idea, given its peers’ superior free cash flow generation and deeper pockets.

Further, we believe Vodafone Idea's network investments remain contingent on debt raise, which in turn is dependent on continued support/relief from Government of India (Rs 440 billion plus annual repayments to GoI starting from H1 FY26).

Stabilization of the subscriber base, along with further relief from GoI, remains imperative for Vi’s long-term survival.

We cut our FY26-27E Ebitda by 7-8% on lower subscriber and ARPU assumptions. We downgrade Vodafone Idea to Sell (from Neutral) with a revised target price of Rs 5, based on DCF implied ~14x FY27E EV/Ebitda.

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