World brokerage agency Citi has a ‘Purchase (Excessive Danger)’ score on Vodafone Concept, with a worth goal of Rs 12. In its analysis report dated April 13, 2025, the agency famous that the federal government’s latest conversion of Rs 36,950 crore in Vi’s spectrum dues into fairness—leading to a 49 p.c stake—might present a lift to the corporate’s pending Rs 25,000 crore debt increase.
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Annual Dues to the Authorities Considerably Lowered
“The investment-grade credit standing ought to, in our view, present a significant increase to Vi’s efforts to finish its long-delayed financial institution debt increase, as that is usually one of many key necessities for banks to offer lending,” Citi Analysis mentioned.
The brokerage added that following the fairness conversion, Vi’s annual dues to the federal government (spectrum and adjusted gross income) for FY26, FY27, and FY28E at the moment are decreased to round Rs 19,000 crore, Rs 23,000 crore, and Rs 32,000 crore respectively, down from roughly Rs 30,000 crore, Rs 43,000 crore, and Rs 43,000 crore earlier.
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Assuming Fundraise of Rs 25,000
“Assuming VI have been to achieve closing out its Rs 25000 crore financial institution debt funding, which is essential for the corporate’s deliberate capex, we estimate no money shortfall in FY26E however a possible shortfall in FY27E (primarily as a result of excessive AGR quantity payable of Rs 16500 crore each year). Vi stays in discussions with the federal government for potential aid on the latter,” Citi Analysis mentioned.
“With the corporate now coming again into the funding grade score, which is the requirement for the banks to offer funding, the debt funding discussions ought to now progress in the correct course,” a Vi spokesperson instructed ETTelecom in a written response.
ICRA Revises Ranking
Following the federal government’s fairness conversion, credit standing company ICRA has assigned Vi an investment-grade score of BBB-. Vi’s final improve was in June 2024, when CARE Scores raised its score from B+ to BB+, following the profitable completion of its Rs 18,000 crore FPO.
Vodafone Concept, in an trade submitting on April 11, mentioned: “ICRA Restricted, has assigned BBB- (Secure) score to the Lengthy-Time period Fund Based mostly Services of the Firm as per the score letter issued to the Firm immediately (i.e. on April 11, 2025).”
“We consider the latest fairness conversion by the federal government and the following credit standing improve to investment-grade are two materials positives for Vi, rising the probability of the corporate finishing its pending Rs 25000 crore debt increase,” the brokerage agency mentioned.
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It added {that a} profitable fundraise would even be a key catalyst for Indus Towers by lifting issues surrounding new tenancies from VI and its future money stream scenario.
Earlier this month, the federal government agreed to transform Rs 36,950 crore of Vi’s excellent spectrum dues into fairness, elevating its stake within the telecom firm from 22.6 p.c to 48.99 p.c.
So, What Are the Dangers for Vi?
Citi has rated Vi as a high-risk funding, citing the corporate’s over-leveraged steadiness sheet. Continued authorities help stays crucial, particularly with the sharp rise in authorities debt repayments that can develop into due from Oct 2025, as soon as the continued moratorium ends and in addition as the opportunity of AGR aid has gone following the dismissal of the corporate’s healing petition by the Supreme Courtroom.
Additionally Learn: Macquarie Downgrades Vodafone Concept on Contemporary Govt Fairness Infusion: Report
Citi additionally famous that disappointing future tariff hikes might forestall the inventory from reaching the goal worth. Different dangers embody a slower-than-expected tempo of 4G subscriber additions, delays in 5G rollout, and higher-than-expected dilution if the federal government converts extra dues into fairness.
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