Stock to buy: Global brokerage Citi has turned bullish on Vodafone Idea, seeing up to 37 per cent upside from current levels and putting the Rs 10 telecom stock firmly back in focus. The upgrade comes as regulatory overhang around AGR dues begins to ease and funding visibility improves, two key triggers that could drive sentiment when markets open on Monday.
The brokerage believes clarity on liabilities, coupled with potential bank funding of nearly Rs 25,000 crore, could mark a turning point for the debt-laden telecom operator. With a large capex plan lined up and balance sheet stress expected to ease gradually, Vodafone Idea may be entering a crucial recovery phase, Citi said.
Why Vodafone Idea is in focus?
India’s telecom space is seeing renewed interest, and Vodafone Idea has emerged as a key talking point. The stock, trading near Rs 10 levels, has caught attention after Citi highlighted improving fundamentals and easing regulatory pressure.
Citi, in its latest note, said the risk-reward for Vodafone Idea has improved, primarily due to clarity around adjusted gross revenue (AGR) liabilities and funding visibility. The brokerage expects a meaningful operational recovery if planned capital expenditure is executed.
AGR relief: A major overhang easing
For years, Vodafone Idea struggled under heavy AGR dues, which weighed on its balance sheet and growth outlook. That overhang is now showing signs of easing.
According to Citi, the government’s revised assessment has brought down the company’s AGR dues to about Rs 640 billion by December 2025, lower than earlier estimates of around Rs 805 billion.
More importantly, there is no additional interest burden, and the existing 10-year moratorium remains intact. This effectively pushes a large portion of payments to FY36–FY41, improving near-term cash flow visibility.
Funding visibility improves outlook
With regulatory uncertainty easing, Vodafone Idea is now in a better position to raise funds. Analysts believe the company could secure nearly Rs 250 billion (Rs 25,000 crore) in bank financing.
This is crucial because the company has outlined a three-year capital expenditure plan of around Rs 450 billion (Rs 45,000 crore). The investment is expected to strengthen network quality, expand 4G coverage, and accelerate 5G rollout.
Improved capex execution could also benefit ecosystem players such as Indus Towers, which rely on telecom operators’ network expansion.
Citi’s view: Buy call with 37% upside
Citi has maintained a ‘buy’ rating on Vodafone Idea, while flagging the investment as high risk given the company’s leveraged balance sheet.
- Target price: Rs 14
- Upside potential: Around 37 per cent
- Basis: FY28 earnings estimates and expected operational recovery
The brokerage expects better execution, subscriber stabilisation, and improved average revenue per user (ARPU) to support valuations going forward.
Tariff outlook and earnings tweaks
Citi has slightly pushed back its expectations for tariff hikes. Earlier projected in early FY27, tariff increases are now expected closer to the third quarter of FY27.
The brokerage has trimmed EBITDA estimates for FY27–FY28 by 6–7 per cent. However, the AGR relief offsets this, leaving overall valuation largely unchanged.
Importantly, Vodafone Idea’s net debt-to-EBITDA ratio could improve from nearly 20 times in December 2025 to around 14 times, signalling gradual balance sheet repair.
Key risks investors should track
Despite the positive outlook, Citi has highlighted several risks:
- High debt levels remain a concern
- Dependence on continued government support
- Delay or lower-than-expected tariff hikes
- Subscriber churn and competition from peers
- Slower 4G and 5G user additions
Vodafone Idea stock performance
Shares of Vodafone Idea closed at Rs 10.22 on April 30, down 0.68 per cent for the day. The stock opened at Rs 10.29, touched a high of Rs 10.30 and a low of Rs 10.01 during the session.
