Vodafone Idea Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 24712.43 Crore) operating in Telecommunications sector.
Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 9647.80 Crore, down -11.76 % from last quarter Total Income of Rs 10933.50 Crore and down -19.06 % from last year same quarter Total Income of Rs 11920.40 Crore. Company reported net profit after tax of Rs -7022.60 Crore in latest quarter.
Investment Rationale
The stability has returned to the telecom industry with 3 private+1(public) structure. The subscriber base of the company has stabilised as per Mar’21 TRAI data and investment in its network has led to some improvement in its network quality as per Ookla speed tests. However, it continues to be loss making due to low ARPU and heavy interest payments. There is still no clarity about timeline of next tariff hike by the telecom industry. There is also overhang of 5G related capex and the ongoing uncertainty about the fund raise by Vodafone Idea. The debt for the company remains high at 10x on FY21 EBITDA and the operating income is hardly enough even to cover interest payments. It needs to infuse fresh capital in the firm and also needs support from the government through moratorium on payment of spectrum dues. It trades at EV/EBITDA of 7.1x on FY23E EBITDA.
Promoter/FII Holdings
Promoters held 72.1 per cent stake in the company as of March 31, 2021, while FIIs held 4.6 per cent, DIIs 1.1 per cent and public and other 22.2 per cent.
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