Motilal Oswal has maintained its neutral stance on Vodafone Idea with an unchanged target price of ₹11 per share, despite acknowledging the positive impact of recent government relief measures on the telecom operator's financial position.

Government Relief Measures Provide Significant Support

The brokerage firm believes the relief measures demonstrate the Government of India's steadfast commitment to maintaining a 3+1 market structure in the Indian telecommunications industry. These measures represent a substantial positive development for Vodafone Idea, with the Net Present Value (NPV) of Adjusted Gross Revenue (AGR) dues significantly reduced.

Outstanding Financial Obligations Remain Substantial

Despite the AGR relief, Vodafone Idea continues to face significant financial challenges. The company still owes approximately ₹1.23 trillion to the Government of India toward deferred spectrum liabilities, with substantial annual repayment obligations scheduled over the coming years.

Motilal Oswal notes that obtaining similar relief on spectrum liabilities, such as interest waivers or further deadline extensions, would not be straightforward.

Market Position Challenges Persist

The research report highlights that despite potential increases in capital expenditure enabled by the AGR relief, regaining and retaining market share remains a significant challenge for Vodafone Idea. This difficulty stems from competitors' superior offerings and free cash flow generation capabilities, which provide them with competitive advantages in the market.

Valuation and Investment Outlook

Motilal Oswal has reiterated its neutral rating with an unchanged target price of ₹11 per share. This valuation is based on 14x FY28 reported EV/EBITDA, which implies approximately 22x FY28 pre-INDAS EV/EBITDA. The brokerage notes this represents a significant premium compared to larger peers in the telecommunications sector.

The relief measures are expected to enable Vodafone Idea's long-pending debt raise and facilitate increased capital expenditure over the medium term, though the company's path to sustainable growth remains challenging given the competitive landscape and substantial remaining financial obligations.

Vodafone Idea has received a buy rating from Citigroup, with the global brokerage firm setting a target price of ₹15.00 per share for the telecom operator.

Analyst Recommendation Details

The recommendation from Citigroup represents the brokerage's assessment of Vodafone Idea's investment potential in the current market scenario.

Market Implications

The buy rating from Citigroup indicates the brokerage's confidence in Vodafone Idea's business prospects. Target prices serve as analysts' estimates of where a stock's value should trade based on their fundamental analysis and market assessment.

This recommendation provides market participants with professional insight into the telecom sector, particularly regarding Vodafone Idea's positioning within the competitive Indian telecommunications landscape.