In a fresh note, Citi has Vodafone Idea to “Buy-High Risk” and set a target price of Rs 14, implying an upside of over 37%. The brokerage said the long-pending AGR uncertainty, which had weighed on lender confidence and delayed capital raising, has now largely been resolved.
“The years-long AGR saga for Vodafone Idea has finally concluded,” Citi said in its report, adding that with the government taking a 36% stake in the company at Rs 10 per share, the effective haircut on AGR dues works out to roughly 20% below the RBI’s estimate of recovery value.
According to Citi, this creates positive implications for both minority shareholders and potential debt providers. The brokerage expects this development to materially improve the company’s ability to secure funding for its next phase of network rollout.
Citi said it had earlier assumed Vodafone Idea would have to raise only Rs 20,000 crore of debt, compared with the company’s targeted Rs 25,000 crore. Following the AGR resolution, the brokerage now believes the company could complete the full fundraising plan, removing a major execution risk from its valuation model.
The brokerage also retained its long-term operating assumptions for Vodafone Idea, including an estimated industry EBITDA multiple of 7x by FY28, but said the probability of achieving those numbers has improved significantly after the policy clarity.
Citi expects Vodafone Idea’s debt funding to remain a key monitorable over the coming months, but noted that lenders now face much lower regulatory uncertainty.At the current price, Vodafone Idea commands a market cap of about Rs 1.1 lakh crore. Citi’s revised valuation is based on an EV/EBITDA framework, applying a 12x multiple on FY28 earnings, while discounting back to arrive at the target price.
The brokerage, however, cautioned that the stock remains high risk. Among key downside risks, Citi highlighted lower-than-expected tariff hikes, higher-than-expected subscriber churn, weaker 4G and 5G subscriber additions, and any delays in debt closure.
Vodafone Idea has been under pressure for years due to heavy debt, subscriber losses and delayed capex, even as larger rivals Bharti Airtel and Reliance Jio Platforms expanded aggressively.
Citi now believes the AGR resolution could mark an inflection point, provided the company is able to convert policy relief into actual funding and faster network deployment.
