Vodafone Idea Shares Rally 13% on Positive Rating Outlook and Capex Strategy
Vodafone Idea share price witnessed a significant surge of over 13% during Friday's trading session, marking its third consecutive day of gains. This upward movement occurred despite broader weakness in the Indian stock market, highlighting strong investor confidence in the telecom operator's recent developments.
Rating Agency Upgrade Fuels Investor Optimism
The primary catalyst for today's rally was CARE Ratings' decision to revise its outlook on Vodafone Idea's long-term bank facilities from "Stable" to "Positive" while maintaining the credit rating at CARE BBB-. This regulatory announcement, filed on January 30, indicates an improved assessment of the company's future credit profile by the rating agency.
Analysts believe this outlook revision, combined with the government's AGR relief package offering material cash flow relief for ten years, could accelerate Vodafone Idea's planned ₹25,000 crore debt raise. The reassessment of AGR dues, which has already commenced, further strengthens this optimistic scenario.
Ambitious Capex Plan and Financial Performance
Vodafone Idea recently unveiled an ambitious ₹45,000 crore capital expenditure plan under its Vi 2.0 strategy. The company aims to achieve double-digit revenue growth, triple its operating profit, and sustain subscriber additions over the next three years through this substantial investment.
However, analysts caution that the implied 15% revenue CAGR appears aggressive, with success contingent upon execution efficiency, tariff hikes, and competitive market dynamics. The telecom operator's Q3 results showed slight improvement, with revenue growth of 1.1% quarter-over-quarter driven by rising average revenue per user (ARPU), which increased to ₹186 from ₹180 previously.
Vodafone Idea managed to narrow its net loss in the December quarter to ₹5,286 crore from ₹5,524 crore in the previous quarter. Nuvama Institutional Equities noted an in-line performance for Q3FY26, where ARPU growth was offset by subscriber base reduction.
Brokerage Outlook and Share Price Trajectory
Nuvama Institutional Equities has retained its 'Hold' rating on Vodafone Idea while raising the share price target to ₹10.5 from ₹10.0. The brokerage adjusted its FY26E and FY27E EBITDA estimates downward by 4.8% and 5.8% respectively, citing postponed tariff hike expectations from FY26E to FY27E.
The ten-year moratorium on AGR dues provides Vodafone Idea with much-needed financial breathing room. Despite falling over 7% in one month, the telecom stock has demonstrated remarkable resilience with a 28% rally over three months, a 60% jump in six months, and 25% gains over one year.
By afternoon trading, Vodafone Idea share price was trading 11.14% higher at ₹11.17 per share on the BSE, reflecting sustained investor interest in the company's turnaround prospects amid challenging market conditions.
