Vodafone Idea’s share price saw a significant jump of over 4% on Friday’s trading session after global brokerage firm UBS upgraded its rating on the stock from ‘Neutral’ to ‘Buy’. UBS also revised its target price for Vodafone Idea from ₹13.10 to ₹18, indicating a potential upside of 70-80% in the near future.
The stock opened at an intraday low of ₹14.23 and touched an intraday high of ₹14.75 on the BSE. Rajesh Bhosale, Technical Analyst at Angel One, noted that the stock has seen a gap-up opening and is witnessing follow-up buying in the initial trades. He suggested that if the gains persist, the stock may see further short-term upward movement towards ₹15.8. However, he also mentioned that support would be the gap left around ₹14.10, and if the stock falls below this level, it may slip into a negative trend.
According to UBS, the potential upside in Vodafone Idea’s share price is based on the possibility of relief measures from the government, such as a reduction in Adjusted Gross Revenue (AGR) dues by the Supreme Court or equity conversion, along with government moratoriums. UBS believes that these measures are quite possible, considering the government’s goal of maintaining three independent private telecom operators in the country.
UBS’ target price of ₹18 for Vodafone Idea is based on a 50% probability that AGR dues will be waived. While there is a possibility of additional relief measures, such as the cancellation, postponement, or equitization of spectrum dues, UBS considers these scenarios less likely and has not factored them into its base price target calculations.
The brokerage firm stated that Vodafone Idea is the most leveraged to any such relief measures and is currently trading at similar EV/EBITDA multiples as Bharti Airtel and Jio for FY26. UBS believes that the risk-reward ratio is attractive for Vodafone Idea going into any such announcement and has upgraded the stock to ‘Buy’.
However, UBS has maintained its ‘Neutral’ rating on Bharti Airtel and Indus Towers. The brokerage has also revised its forecasts for Indus Towers, assuming three viable private telcos in the Indian telecom sector. They predict that the tenancy ratio will increase from 1.68x in FY24 to 1.70x in FY28 and that the majority of Vodafone Idea’s receivables will be paid off, bringing their DCF value to ₹355 per share.
