VIL shares slump on weak Q3, no fund raising

Shares of Vodafone Idea fell as much as 5 percent in early trade on January 24 after analysts were disappointed by the company’s earnings performance for the quarter ended December.

At 10:00 am, the scrip traded at Rs 11.40 apiece on the BSE, while the benchmark Sensex was at 58,608.22, down 428.96 points or 0.73%.

Vodafone Idea’s consolidated net loss widened to Rs 7,230.9 crore in Q3FY22 even as revenues rose 3.3 percent sequentially.

That said, operational performance of the company was weak in the reported quarter. Consolidated operating profit of the company declined 1.2 percent on a quarter-on-quarter basis to Rs 3,816.5 crore despite the company undertaking tariff hikes in the quarter.

“In the call, the management did not give any clarity on capex, which was kind of expected because with liquidity issues, they don’t have much headroom like peers to plan aggressive capex. We expect VIL’s capex to languish at the current levels. The management has said they will be able to share a capex plan in Q4FY22; so until then, investors are in a wait-and-watch mode,” said an analyst, requesting anonymity.

As such, investors can expect the full impact of recent price hikes to be visible in the current quarter (Q4). Needless to say, investors could track the revenue trajectory closely in the near term. Further, significant fundraising remains key.

“Without significant fundraising, we think VIL’s network investments and 5G rollout would remain constrained, at least in the near term, leading to further market share erosion,” said Nomura’s analysts.

CT Bureau