Vodafone Idea Ltd (VIL) is poised to announce its first-quarter results, with consensus estimates pointing towards another period of substantial financial headwinds for the telecom operator. According to Bloomberg, the company is expected to post a net loss of ₹5,391 crore for the June quarter.
Q1 Financial Projections
Revenue for the quarter is pegged at ₹11,502 crore. Key operational expenses contributing to the projected loss include network expenses and IT outsourcing costs estimated at ₹2,421 crore, licence fees and spectrum usage charges at ₹959 crore, and roaming and access charges at ₹1,096 crore. Finance costs are a significant factor, projected at ₹4,717 crore.
Despite the anticipated net loss, the Average Revenue Per User (ARPU) is expected to show sequential improvement. This uptick is attributed to an improved subscriber mix and the ongoing rollout of 5G services across its network.
Brokerage Views and Subscriber Growth
Several brokerages have offered their insights ahead of the earnings release:
- Centrum Broking forecasts Vodafone Idea to add 2 lakh subscribers sequentially, bringing its total to 19.2 crore. They project a 1.5% quarter-on-quarter (QoQ) growth in ARPU to ₹176 per month, driven by the migration of 2G users to 4G technology and a higher number of days in the quarter. Centrum also highlighted that management commentary on ongoing capital expenditure and fund-raising programs would be closely monitored.
- JM Financial expects VIL to report a net subscriber addition of 3 lakh, including machine-to-machine (M2M) connections, for Q1FY27. They anticipate ARPU (including M2M) to increase by 1.9% QoQ to ₹177 and ARPU (excluding M2M) by 2.1% QoQ to ₹194. This is expected to lead to a 1.8% QoQ rise in revenue to ₹11,500 crore and a 1.7% QoQ increase in reported EBITDA to ₹5,000 crore. JM Financial projects the net loss for the quarter at ₹5,320 crore.
- Kotak Institutional Equities, however, presents a more conservative outlook, estimating a Q1 loss of ₹6,608 crore. They foresee revenue growing 3.5% year-on-year (YoY) to ₹11,022 crore, with a marginal 0.9% QoQ increase in revenues and a 0.3% QoQ decrease in EBITDA, primarily due to higher network and other operating expenses offsetting better ARPU and subscriber mix.
Analyst Recommendations and Share Price Targets
Ahead of the Q1 results, analyst sentiment towards Vodafone Idea shares was mixed. The stock had garnered 10 'Sell' calls, eight 'Hold' calls, and three 'Buy' calls from various analysts. The consensus target price stood at ₹11.95, implying a potential 7.4% downside from current levels.
Among recent calls in July, Macquarie suggested an 'Underperform' rating with a target of ₹9. ICICI Securities recommended 'Reduce' with a target of ₹11, while Nomura maintained a 'Neutral' stance with a target of ₹12.60. Ambit Capital held the highest target among the mentioned brokerages, pegging the scrip at ₹19.
Vodafone Idea shares have seen a significant rally of 89% over the past year, underscoring investor interest despite persistent financial challenges.