Vodafone Idea: 'Everything Must Go Right' for Revival, Says Motilal Oswal After Q4 — Check Revised Target Price

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Motilal Oswal Report

The brokerage firm Motilal Oswal has reiterated its Neutral rating on Vodafoe Idea Ltd. and has revised target price of Rs 10 vs Rs 9.5 earlier, based on DCF-implied ~14.5x FY28E EV/Ebitda, implying ~24x+ FY28 pre-IND AS Ebitda, which is at a significant premium to Vodafone Idea's larger peers (~10.5x implied FY28 pre-IND AS Ebitda for Bharti's India operations at current market price).

Management's ambitions of double-digit revenue growth and increasing cash Ebitda 3x over FY26-29 remain a tall ask and would require several things such as-

1. closure of the debt raise,
2. sustained tariff hikes or a change in tariff construct,
3. stabilisation in subscriber trends,
4. more rational competition in subscriber acquisition, and
5. continuation of a benign regulatory regime, including likely relief on spectrum repayments.

The brokerage noted that not all of these variables are in management's control. Moreover, if Vodafone Idea were to emerge as a competitive third player, it would expect peers with superior free-cash-flow, network, and product offerings to raise competitive intensity.

Its FY27 estimates remain largely unchanged, while the brokerage has raised FY28E revenue/pre-IND AS Ebitda by 3-6%, driven by ~2.5% higher average revenue per user (subscriber mix improvements) and stabilisation of the overall subs base. 

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