Shares of Vodafone Idea surged by nearly 10% in recent trading, reaching a high of Rs 11.24, following a significant reassessment of its Adjusted Gross Revenue (AGR) dues. This reduction, combined with a payment moratorium, has been hailed by analysts as a definitive long-term relief for the debt-laden telecom operator.
AGR Dues Eased, Funding Prospects Brighten
The reassessment lowered Vodafone Idea's AGR dues from an initial Rs 87,695 crore to Rs 64,046 crore, marking a substantial 27% reduction. This financial reprieve is expected to significantly improve the company's prospects for its planned Rs 45,000 crore fundraising initiative, which includes securing Rs 25,000 crore in bank debt.
Foreign brokerage CLSA maintained its 'Outperform' rating on Vodafone Idea, rolling forward its target price to Rs 11. CLSA noted that while the AGR dues reduction is 27%, the combined effect with the payment moratorium offers substantial long-term stability. The brokerage now factors in a higher 11 times EV/EBITDA multiple for its valuation, citing the AGR relief as a key driver.
Brokerage Targets and Future Outlook
Citi also expressed a positive outlook, labeling Vodafone Idea as a 'high-risk buy idea' with an ambitious target price of Rs 14. According to Citi, the chapter of regulatory uncertainty is largely behind the company, paving the way for it to finalize its pending bank debt raise. This, in turn, is crucial for executing its three-year capital expenditure plan totaling Rs 45,000 crore, as outlined in the company's January strategy update.
The revised AGR payment schedule mandates Vodafone Idea to pay a minimum of Rs 100 crore annually between FY32-35, with the remaining dues to be settled in equal installments of Rs 10,600 crore annually from FY36-41. Beyond AGR, the company still faces a massive spectrum debt of Rs 1,24,900 crore, although the government converted Rs 37,000 crore of this debt into equity in April 2025, increasing its shareholding to 49%.
Both brokerages highlighted that a tariff hike remains a critical catalyst for Vodafone Idea's stock performance and overall financial health, essential for improving its average revenue per user (ARPU) and profitability.