Motilal Oswal Neutral on Vodafone Idea, Cuts Target to ₹10

TELECOM

Overview

Motilal Oswal maintains a Neutral stance on Vodafone Idea, revising its target price down to ₹10. The firm highlights Vi's ambitious FY26-29 plans for double-digit revenue growth and increased cash EBITDA, backed by a significant ₹450 billion capex for 4G and 5G network expansion. Valuation remains a point of premium compared to larger peers.

Network Expansion and Growth Ambitions

Vodafone Idea (Vi) has laid out an aggressive roadmap aiming for double-digit revenue growth and a threefold increase in cash EBITDA by FY29. This strategy hinges on improved subscriber trends and substantial investment in its network infrastructure.

Substantial Capex Plan

The telco plans to deploy approximately ₹450 billion in capital expenditure between FY26 and FY29. This funding will primarily target achieving parity in 4G network coverage across 17 key circles and rolling out 5G services in urban areas. Radio and tower additions are expected to consume about 70% of this budget.

Valuation Concerns

Motilal Oswal reiterates its Neutral rating, but adjusts the target price to ₹10 from ₹11. The revised target implies a ~13x FY28E EV/EBITDA multiple, or approximately 21.5x FY28E pre-IND AS EBITDA. This valuation is considered a significant premium when benchmarked against Vi's larger, more established competitors.

Outlook

While Vi's management expresses confidence in future performance, the market may weigh the significant execution risks and the competitive landscape against these ambitious projections. The path to sustained profitability remains challenging.

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