 |
|
Vodafone Idea (VIL) shares surged over 4% on Friday after global brokerage UBS upgraded its rating to ‘buy’ from ‘neutral’, citing potential relief in the form of AGR (adjusted gross revenue) dues reduction or equity conversion.
The brokerage firm raised its target price for VIL shares to ₹18 from ₹13.10, indicating a bullish outlook for the company.
UBS expects a 70-80% rally in VIL shares in the near future, driven by factors such as a potential AGR dues reduction by the Supreme Court or equity conversion, along with government moratoriums.
The brokerage firm believes that VIL is well-positioned to benefit from any such relief measures, given its high leverage to any such announcement.
UBS also noted that VIL shares are currently trading at similar multiples to Bharti Airtel and Jio, despite having higher leverage, making it an attractive investment opportunity.
The upgrade from UBS comes amid a challenging period for VIL, which has been facing financial stress due to high debt and intense competition in the Indian telecom sector.
VIL has been exploring various options to raise funds and reduce its debt burden, including potential stake sales and asset monetization.
The company recently announced plans to raise up to ₹25,000 crore through a rights issue, which is expected to provide much-needed capital to support its operations and growth plans.
Analysts remain cautious about VIL's long-term prospects, given the competitive landscape and regulatory uncertainties in the Indian telecom sector.
However, the upgrade from UBS suggests that the brokerage firm sees value in VIL shares at current levels, based on the potential for relief measures and the company's strategic importance in maintaining a three-player telecom market in India.
Source: Vodafone Idea share price jumps over 4% as UBS upgrades stock to ‘buy’