Vodafone Idea extends rally into third day ahead of Q4 results on Tuesday

The stock surged 5 per cent to Rs 10.93 in the intra-day trade today, and has bounced back 18 per cent from Friday's intra-day low of Rs 9.27 per share.

Shares of Vodafone Idea were up 5 per cent to Rs 10.93 in the intra-day trade on the BSE on Monday, in otherwise weak market, ahead of its January-March quarter (Q4FY20) results slated for Tuesday, June 30.

The stock of the telecom services provider was trading higher for the third straight day and has bounced back 18 per cent from Friday’s intra-day low of Rs 9.27 per share. The stock hit a recent high of Rs 12.62 on June 8 in the intra-day trade.

At 02:31 pm, Vodafone Idea was up 4.5 per cent at Rs 10.86 on the BSE, as compared to 0.71 per cent decline in the S&P BSE Sensex. A combined 635 million equity shares have changed hands on the counter on the NSE and BSE till the time of writing of this report.

Brokerage firm Kotak Institutional Equities expects a 6 per cent quarter on quarter (QoQ) increase (flat on a yearly basis) in revenue on the back of a full-quarter benefit from the December tariff hikes, partly offset by subscriber loss to 296 mn (304 mn in 3QFY20).

“We expect average revenue per user (ARPU) print of Rs 120/month (up 10 per cent qoq and 15 per cent yoy). 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 in March quarter earnings preview.

The Supreme Court, on the other hand, on June 18, 2020 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.

According to brokerage firm Credit Suisse, Vodafone Idea will find it challenging to pay more than Rs 5,000 crore of incremental upfront dues in the AGR dues.

It believes that after having paid Rs 6,900 crore of AGR dues, estimate is that Vodafone Idea would have Rs 6,000 crore of cash balance as of March 2020 assuming no incremental capex in fourth quarter of financial year 2020, it said. CLICK HERE TO READ FULL REPORT