Vodafone Idea shares saw a sharp decline of over 33% in September, marking their biggest drop since October 2019. The stock fell from Rs 15.64 at the beginning of the month to Rs 10.36 on September 30, reducing its market capitalization by more than Rs 34,000 crore, from Rs 1.06 lakh crore to Rs 72,000 crore.
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The plunge followed the Supreme Court’s decision to reject telecom companies’ plea to reassess their adjusted gross revenue (AGR) dues. Vodafone Idea had filed a curative petition seeking three main reliefs: the correction of errors in the AGR demand, a cap on penalties at 50%, and a revision of the penalty interest rate to 2% above the State Bank of India’s prime lending rate.
This unfavorable verdict further aggravates Vodafone Idea’s already critical cash flow issues, casting doubt on its financial future. The company’s ability to proceed with debt-raising plans, essential for sustaining its capital expenditure, remains uncertain.
On the other hand, the ruling could benefit Bharti Airtel, which may see market share gains due to Vodafone Idea’s struggles.
In a best-case scenario where AGR dues are reduced by 65% and tariffs increase steadily, analysts at Goldman Sachs see the potential for Vodafone Idea’s share price to rise to Rs 19.
