Vodafone Idea declines 4% ahead of Q4 results; here's what brokerages say

Shares of Vodafone Idea dipped as much as 4.6 per cent to Rs 10.60 on the BSE on Tuesday ahead of the announcement of the March quarter results for FY20 (Q4FY20). 

The stock had closed higher in the last three trading sessions and has bounced back as much as 23.5 per cent from Friday’s intra-day low of Rs 9.27 per share. The stock hit a recent high of Rs 12.62 in intra-day trade on June 8.

Around 48 crore shares have changed hands on the NSE and BSE combined so far. At 10:55 AM, the stock was trading 2.7 per cent lower as compared to 0.67 per cent gain in the S&P BSE Sensex.

What brokerages expect from Vodafone Idea's Q4FY20 results:

Brokerages are penciling in around 6 per cent growth in Vodafone Idea's Q4 revenue on a sequential basis, on the back of 12 per cent rise in average revenue per user (ARPU). While loss is expected to narrow for the quarter, the company may perform well on the operational front.

Kotak Institutional Equities expects a 6 per cent quarter on quarter (QoQ) increase (flat on a yearly basis) in revenue to Rs 11,800.8 crore on the back of a full-quarter benefit from the December tariff hikes, partly offset by subscriber loss to 29.6 crore from 30.4 crore in Q3FY20. It also expects Voda Idea's loss to narrow from Rs 6,440 crore to Rs 3,656.4 crore on a sequential basis.

“We expect ARPU print of Rs 120/month. Operating leverage benefit and realization of more cost saving synergies should drive a 38 per cent QoQ and 12 per cent YoY increase in Ebitda to Rs 1,770 crore,” the brokerage firm said.

Analysts at Emkay are building in a similar rise of 12 per cent in Voda Idea's ARPU on the back of the tariff hike and total subscriber loss of 80 lakh. Revenue is pegged at Rs 11,787.2 crore for the quarter while the brokerage expects the telecom operator to post a loss of Rs 5,780.1 crore.

"Wireless revenue and Ebitda are projected to rise 9 per cent and 13 per cent, respectively, on a qoq basis. We expect Ebitda margins to expand 205bps sequentially. Data subscriber addition of 30 lakh should also support revenue. Data volume is expected to increase meaningfully at 10 per cent, while Minutes on Network should rise marginally at 2 per cent qoq," they said.

The Supreme Court recently asked Bharti Airtel and Vodafone Idea to submit their financial statements for the past 10 years in the long-winded adjusted gross revenue (AGR) case as the two telcos listed reasons for not furnishing bank guarantees and sought a 20-year term to pay their adjusted gross revenue (AGR) dues. The top court will next hear the case in the third week of July. As such, investors will pay special attention to the management's commentary on that front.