JP Morgan has also revised Vodafone Idea share target price to Rs 10 from Rs 7, implying an 8.8-per cent upside from the stock’s last closing price of Rs 9.19 per share on the BSE. This target price is for December 2025.
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“We are Neutral on Vodafone Idea share as we believe the company is still in the early days of proving the success of its strategy that will begin with capex rollout, followed by arresting subscriber losses before regaining share. We will wait for proof of success in arresting subs losses and balance sheet exposures before turning more constructive,” JP Morgan said in a report dated October 10.
JP Morgan on Vodafone Idea stock
According to JP Morgan analysts, Vodafone Idea has Rs 2,09,500 crore worth of adjusted gross revenue (AGR) and spectrum dues that it has to start paying from financial year 2025-26 (FY26) onwards. Of this, the brokerage expects the deferred amount of Rs 29,000 crore may get converted to equity. Post this, Vodafone Idea will owe Rs180,500 crore to the government, which will be paid in annual instalments of Rs 23,400 crore over FY26-31.
“Based on our current assumption of 15 per cent tariff hike each in FY26 and FY27, Vodafone Idea should be able to repay the annual dues in FY26 and FY27. It could, however, fall short from FY28. It will need to take another tariff hike of 20 per cent in FY28 to bolster Cash Ebitda and ensure it is able to repay the dues every year till FY31,” JP Morgan said in its report.
JP Morgan’s upgrade on Vodafone Idea stock has pushed up its FY27 Ebitda (earnings before interest estimate by 4 per cent and free cash flows to firm (FCFF) by 18 per cent. Vodafone Idea, it said, may see a 22 per cent CAGR in Ebitda and 38 per cent in FCFF over the next two years till FY27 on persistent tariff hikes.
JP Morgan on Bharti Airtel, Bharti Hexacom, Indus Towers
Among other telecom stocks, JP Morgan is ‘Overweight’ on Bharti Airtel on the back of 17 per cent tariff hikes across the portfolio; gap between postpaid and prepaid subscribers dropping to 1.6x from 3x; expectations of a 15 per cent tariff hike in November 2025 and November 2026; and a meaningful increase in dividends over FY25/26E from improving FCF and the deleverage.
JP Morgan has set Bharti Airtel share target price at Rs 1,920 for December 2025, baking in higher India wireless revenues/Ebitda by 5-6 per cent and margins by 50bps for FY27. Most of the impact of this hike should be visible only in FY28, JP Morgan said. It expects Bharti Airtel to reach its Rs 300-Arpu (average revenue per user) target in FY27.
JP Morgan is also ‘Overweight’ on Bharti Hexacom and has a share price target of Rs 1,580 for December 2025 (up from Rs 1,330 for September 2025). It has increased revenues and Ebitda estimates by 4-5 per cent for FY27 on hopes of another 15 per cent tariff hikes.
For Indus Towers, JP Morgan Analysts have set a share price target of Rs 525 (up from Rs 500 for Sept 2025). It has an ‘overweight; rating on Indus Towers as well.
“We believe Vodafone Idea’s capex and tower/tenancies rollout plans are positive for Indus Towers and should drive low double digit revenue/Ebitda growth over FY25-27E. Secondly, Vodafone Idea’s confidence on the recovery of remaining past dues seems high which is why Indus Towers went ahead and did the buyback of Rs 2,640 crore effectively returning capital for the first time in two years. We believe this should drive regular dividend payments from FY26 onwards. We forecast Rs25/30 dividend per share in FY26/27E, implying 6 per cent/7 per cent dividend yield, respectively,” JP Morgan said.
The brokerage considers Indus Towers’ stock as “relatively inexpensive” at 7.5x EV/Ebitda and 17x price-to-earnings (1-year forward) vs Bharti Airtel (11x/38x) and Bharti Hexacom (13.5x/39x).
What to expect from the Telecom Sector in Q2FY25? JP Morgan View
JP Morgan expects Bharti Airtel to report 6.7 per cent quarter-on-quarter (Q-o-Q) growth in India wireless revenue, led by 9 per cent increase in Arpu. It expects subscriber churn of 1.2 million for the quarter.
For Bharti Hexacom, JP Morgan analysts predict 6.1 per cent Q-o-Q revenue growth led by 7 per cent increase in Arpu and subscriber churn of 0.2 million.
It forecasts Vodafone Idea to report 5.7 per cent Q-o-Q revenue growth in Q2FY25, led by 8 per cent Arpu growth and amid subscriber loss of 4 million.
Indus Towers, meanwhile, may see 4 per cent Q-o-Q revenue growth led by tower adds.
First Published: Oct 11 2024 | 9:11 AM IST
