Vodafone India shares can rally up to Rs 23 if…: Kotak Equities

Vodafone Idea shares have the potential to surge to Rs 23 in a bull case scenario, according to Kotak Institutional Equities.

The brokerage maintained a ‘sell rating’ on the stock, saying it is a high-risk, high-reward opportunity.

However, Kotak analysts noted that if certain conditions are met, including a sharper 10% annual growth rate in average revenue per user (ARPU) over ten years, the stock could reach Rs 23 per share.

"In our bull case, we assume a sharper 10% 10-year ARPU CAGR (versus our base case estimate of ~8.5%). In this case, our FV for Vi could potentially increase to Rs23/share. However, several things (such as AGR waiver, moderation in competitive intensity from peers and sharper tariff hikes) have to fall in place for this outcome," said Aditya Bansal of Kotak Equities.

As of today, the stock was trading at Rs 13.32 on the Bombay Stock Exchange at 1 pm.

Kotak Equities highlighted that achieving this bull case scenario would require factors such as an AGR waiver, reduced competitive intensity, and significant tariff hikes.

However, in a more conservative base scenario, Kotak has set a target of Rs 10 per share.

This scenario assumes the continuation of the current market structure beyond FY2026, with the government providing relief measures like deferrals, waivers, or conversion of spectrum and AGR dues to support Vodafone Idea's survival.

The brokerage firm suggested that Vodafone Idea's recent fund-raising efforts would maintain the existing market dynamics in the medium term, potentially shifting telcos' focus from acquiring subscribers to generating returns through tariff increases.

The long-term recovery of Vodafone Idea, however, is contingent on government relief measures, a decrease in competitive pressures, and the company's ability to prevent further subscriber losses.

"We await signs of Vi's subscriber base stabilization and greater clarity on potential GoI relief measures/dilution, before turning more constructive," the brokerage said.