Vodafone Idea rallies 10% on BSE as UBS upgrades stock with 'buy' rating

Vodafone Idea stock: The market capitalisation (market-cap) of Vodafone Idea surpassed the Rs 1-trillion mark today

Vodafone Idea share price: Shares of Vodafone Idea hit over two-month high of Rs 15.43 up 9.8 per cent on the BSE in Friday's intr-day trade amid heavy volumes. The surge comes after UBS upgraded the stock with a 'buy' rating and a target price of Rs 18 per share.

The stock of telecom services provider is trading at its highest level since February 28, 2024. With today's rally, the market capitalisation (market-cap) of Vodafone Idea surpassed the Rs 1-trillion mark, and was at Rs 1.02 trillion at 11:00 AM.

Vodafone Idea stock price had hit a 52-week high of Rs 18.42 on January 1, 2024. Vodafone Idea stock saw huge trading volumes with a combined nearly 810 million shares changing hands on the NSE and BSE in the first half-an-hour of trading.

UBS believes market is pricing in 15- 20 per cent mobile price increase in coming 12-24 months for Vodafone Idea. The foreign brokerage said a relief in the form of adjusted gross revenue (AGR) reduction by the Supreme Court or equity conversion, moratoriums by the government is highly likely, especially given the government's stated objective of ensuring three viable private telcos.

5G deal

Meanwhile, in past two trading days, Vodafone Idea stock surged 10 per cent on report that Ericsson India in talks with Vodafone Idea for a 5G deal.

Vodafone Idea on clarification on news report said that Ericsson India is one of the network vendors of the company.  The company is enlarging its footprints with 5G roll out and in connection with the same, the Company is in discussions with various network vendors, including Ericsson, for supply of network gears for the 5G rollout, the company said.

Earlier this week, Nomura had also upgraded Vodafone Idea stock to 'Neutral' on an improving outlook following the conclusion of its fund raise; March quarter earnings are in line with estimates.

"A long journey remains to be traversed, but the tempest has largely passed and Vodafone Idea is gearing up to meet clear skies ahead," the brokerage firm said. The outlook for the industry has improved considerably, Nomura said, with all players aligned on the need for average revenue per user (ARPU) hikes and the industry setting into a 3-private player market.

Vodafone Idea being able to complete its fund raise has materially improved the outlook and will enable Vodafone Idea to catch up with peers on network experience; commence 5G rollout; and compete effectively in the industry and curb its subscriber losses.

Nomura expects the Indian telecom industry to take a material tariff hike of 15 per cent following the conclusion of the Lok Sabha 2024 elections, which should be a key trigger for the stock, and expect the government to offer some form of relief to the company when payments in FY25 come up.