Vodafone Idea Shares Plunge After Supreme Court Decision on AGR

Vodafone Idea shares experienced a significant downturn on Friday, falling over 5% to reach a 52-week low, dropping below the ₹10 mark. The stock declined by 5.68%, touching ₹9.79 per share on the National Stock Exchange (NSE). This decline continues a downward trend, with the stock having fallen more than 24% over the past two days. The fall follows the Supreme Court of India‘s ruling in the Adjusted Gross Revenue (AGR) case, which has posed a substantial challenge to the debt-laden telecom company.

The Supreme Court, on Thursday, upheld its 2019 decision on the AGR ruling, rejecting curative petitions filed by Vodafone Idea and other telecom firms. The petitions were an attempt to seek relief from the court’s earlier ruling, which included non-telecom revenue in the AGR calculations for determining the licence fees and spectrum charges payable to the government.

Nuvama Institutional Equities commented on the situation, stating, “The unfavourable Supreme Court verdict is a significant setback for Vodafone Idea. However, the sharp 20% correction in the stock price on Thursday has largely captured the value of the additional liability beyond market expectations.” The firm further added that future attention would focus on Vodafone Idea’s progress regarding key operational factors, such as subscriber loss rate, effects of tariff hikes, and capital expenditure activities.

The brokerage firm has consistently argued that Vodafone Idea requires three critical developments to continue operations: capital infusion, tariff hikes, and liability waivers. While the first two components have seen progress, the waiver of liabilities now seems unlikely. Nuvama has adjusted the company’s target price to account for the entire AGR liability, estimated at ₹70,000 crore, maintaining a ‘Hold’ rating but reducing the price target to ₹11.5 per share, down from ₹16.5.

As of 10:15 AM on Friday, Vodafone Idea shares were trading at ₹9.97 per share on the NSE, a decrease of 3.95%. Investors are advised to consult certified experts before making any investment decisions. The views expressed by the analysts are personal opinions and not those of any media outlet.