Ebitda margin was down 250 bps at 8.15 in Q2FY19 from 10.6% in Q1FY19. Revenue decreased by 7.1% Q-o-Q at 120.24 billion. The revenue was impacted by lower customer base and declining average revenue per user (ARPU) from Rs 92 to Rs 88 during the quarter.
“Vodafone Idea's Q2FY19 reported/proforma results were weaker than our expectations as EBITDA margin deteriorated more sharply than expected (reported/proforma margin of 6.0%/8.1% vs. around 9.0% expectation). The proforma EBITDA of ~Rs9.8bn (down 29% QoQ) continues to be impacted by negative operational leverage,” analysts at SBICAP Securities said in result review.
With current weak cash flow generation and high anticipated CapEx requirements, the company announced plans to raise additional equity capital of around Rs 250 billion to deleverage its balance sheet (Vodafone Group/Aditya Birla group are expected to infuse around Rs 110 billion/Rs72.5 billion respectively with remaining proceeds expected from Rights/QIP/Preference issue by Q4FY19), and potential sale of its fiber assets.
“Also, the company can monetize Idea’s stake in Indus (valued around Rs 53.7 billion) to shore up its balance sheet. Synergy benefits (earlier estimated at NPV of around US$10 billion) from the merger remain the key monitorable, and the company indicated that site rationalization, spectrum consolidation and network integration are progressing along expected lines,” the brokerage firm said with ‘sell’ rating on the stock and target price of Rs 40 per share.
At 11:25 am; Vodafone Idea was trading 9% lower at Rs 37.70, as compared to 0.36% rise in the S&P BSE Sensex. The stock hit a record low of Rs 32.55 on October 8, 2018, on the BSE in intra-day deal. The trading volumes on the counter more than doubled with a combined 25.1 million equity shares changed hands on the BSE and NSE so far.