Vodafone India’s revenues are getting stronger after tariff hikes but its fate is still linked to Supreme Court orders

• Vodafone Idea has tried to hit an upward trend multiple times this year only to tank subsequently.
• Adverse rulings and comments by the Supreme Court have hit the stock hard, eroding investor wealth by up to 35% on a single day.
• Even as the future of Vodafone Idea looks grim, it has been given a ‘buy’ rating on account of improved earning prospects.

The Vodafone Idea stock has had a rough start to 2020 with its future hanging in the balance. Now, the Supreme Court’s latest comments in the AGR spectrum dues case has sent the stock spiraling down further.

The Supreme Court came down hard on Vodafone Idea which paid ₹3,354 crore after self-assessing its AGR spectrum dues. This had an immediate effect on the Vodafone Idea stock which plummeted by 35% to hit a low of ₹3.16 yesterday.

The SC held that no further objections to its orders would be allowed as far as the payment of dues is concerned. It noted that the ‘self-assessments’ made by the telco is in contempt of the apex court.

Essentially, Vodafone Idea might have to cough up the total amount of ₹53,000 crore as assessed by the Supreme Court. The payment timeline could be relaxed, giving the company a chance to survive.

Here’s how Vodafone Idea has performed since the AGR order

A quick check of the Vodafone Idea stock since the Supreme Court order in January shows us that the last few months have been tough for the investors. Its share price touched ₹3.03 in February when the Supreme Court ordered the company to pay AGR dues, which is 50% down from the peak of ₹6.05 in January.


The stock almost made up for the massive falls by hitting ₹5.85 earlier this week, but the SC’s comments yesterday tanked it once again.

Vodafone Idea stock gets a ‘buy’ rating

Despite the adverse market conditions and the clouds over it, research agency CLSA has upgraded Vodafone Idea from ‘sell’ to ‘buy’ on the back of improved earnings prospects. The agency notes that the risks are overdone, and it has increased the target price to ₹12 from ₹3.5.

Vodafone Idea’s troubles could be behind

Last year, things were so dire for Vodafone Idea that its British parent’s CEO Nick Reed said that the Indian telco is headed for liquidation without government’s support. The Supreme Court’s AGR ruling and the onslaught from Jio had pushed the company to the brink, but its troubled days could well be behind especially after it decided to pay up.

While its stock has had a difficult time this year, Vodafone Idea’s earnings prospects seem to be growing. According to a report by CLSA, the company’s revenues have started growing again. The report also factors in a tariff hike of 40%, which should improve Vodafone Idea’s revenues to some extent.

However, the burden of payments might hang on for a longer time, after yesterday’s events.

See also:

Indian Supreme Court's ego is coming in the way of peace between the government and telcos

Vodafone Idea pays Rs 3,354 cr to govt in AGR dues, claims principal amount fully paid now

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Vodafone Idea and its timeline of woes