Signs showing Vodafone Idea stock prices headed for single digits

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Vodafone Idea shares increased up to five times and delivered 384% returns to investors. Price per share stood at a high of Rs 13.80 in January 2021 compared to Rs 2.83 in February 2020. But this increase is at a risk now.

Share prices stood at Rs 12.05 on Wednesday and started to fall significantly due to the narrowing December quarter as a result of failure to enthuse Dalal street. According to analysts the payment extension of adjusted gross revenue was only short-term relief and the company required immediate capital and tariff increase or floor tariff implemented. Predictions indicate a stock percentage downfall by up to 58% and prices reaching Rs 5. Differed spends on a network and continued market share loss will add to the woes.

Capital issue constraints are to be addressed by raising additional capital and increasing tariffs. The loss in subscribers can further impact the company’s ability to invest and expand its network.

As of September Vodafone’s idea had a negative net worth of  Rs 43474.70 crore while competitors such as Reliance Jio and Bharathi Airtel had a net worth of Rs 179617 crore and Rs 71303.1 respectively.

There is a consolidated net loss of Rs 4532.4 for December compared to Rs 7218.5 loss in the past quarter as reported by the telco. Revenue growth of 1% quarter on quarter reaching Rs 10894 crore. Loss of subscribers by 20 lakhs was less than predicted compared with the average loss in the last four quarters which was 1 crore. The addition of subscribers using 4G saw an addition of 30 lakhs, compared to the 15 lakhs added in the September quarter.

 The 4G customer addition increased the average revenue per user to Rs 121 in December compared to Rs 119 in the September quarter.

Vodafone’s idea of survival will be depended on its success in raising funds and a consistent rise in tariffs in the future.

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