Target: ₹8.5
CMP: ₹8.21
Vodafone Idea reported broadly in-line performance for Q3FY25. The company reported revenue of ₹11,120 crore (up 1.7 per cent q-o-q), driven by 4.5 per cent q-o-q increase in ARPU to ₹163; offset by a 5.2 million decline q-o-q in the subscriber base to 199.8 million. Postpaid subscribers grew by 0.7 million q-o-q to 25.2mn (highest postpaid addition in last 4 quarters).
Average data usage by 4G customers was 15.2 GB/month vs 15.4 GB/month in Q2FY25. 4G/5G subscriber base increased by 0.1 million to 126 million (vs decline of 0.8 millionn in Q2FY25). It added 20,651 4G sites during the quarter, bringing the total to 460.2k vs 439.6k in Q2FY25 while the 4G coverage reached 107 crore vs 105 crore in Q2FY25. EBITDA margin improved by 80bps QoQ to 42.4 per cent, led by positive operating leverage.
Capex was ₹3,210 crore vs ₹1,260 crore in Q2FY25. The network rollout will accelerate further in Q4FY25 with FY25 expected capex of about ₹10,000 crore. Debt from the banks stood at ₹2,330 crore vs ₹3,250 crore in Q2FY25 while net debt remained ₹2 lakh crore. The company continues to expand its presence, with VLR subscribers growing across 11 circles in Dec’24/Jan’25.
We roll over to Mar’27E for valuation and maintain Reduce with a revised target price of ₹8.5 using EV/EBITDA of 10.5x on Mar’27 estimates.