Vodafone Idea share price up 10% after Citi projects 77% upside, govt converts ₹36,950 crore dues into equity | Stock Market News

Vodafone Idea share price rallied as much as 10 per cent on Tuesday to ₹7.80 apiece on NSE as government is set to become Vodafone Idea’s largest shareholder by converting its spectrum dues into equity. This ₹36,950 crore equity conversion will raise the government’s stake in Vodafone Idea to 48.99 per cent.

Brokerage firm Citi has also reaffirmed ‘buy’ rating on Vodafone Idea stock, sees 77 per cent upside potential.

Citi has described this move as a significant development with substantial positive implications. The brokerage also noted that it demonstrates strong and timely support from the government.

According to Citi, this decision is expected to provide considerable relief to Vodafone Idea’s cash flow over the next three years and facilitate the completion of its bank debt fundraising. The company has already secured over ₹20,000 crore through its largest Follow-on Public Offer (FPO) last year, along with additional funds from its promoters.

“In a material development that we view as having significant positive implications, Voda Idea announced (March 30, 2025) that the gov’t has decided to convert part of its outstanding spectrum dues to equity,” said Citi Research.

Citi has set a price target of ₹12 for Vodafone Idea, indicating a potential 77% upside from Friday’s closing price.

Citi has retained its buy rating on Indus Towers, India’s largest telecom infrastructure provider, setting a target price of ₹470, which suggests a potential 40.7% gain from the previous closing price.

The brokerage noted that an equity-backed recovery of Vodafone Idea could enhance Indus Towers’ cash flow outlook, as VI, a major tenant, has faced challenges in meeting tower rental payments.

How Indus Tower to gain from Vodafone Idea revival?

Citi stated that Indus Towers could gain if Vodafone Idea stabilizes its operations, as the telecom tower provider has been facing pressure due to VI’s payment delays.

“The situation has stabilised in recent quarters and should improve going forward, with Voda Idea finally completing its long-pending and crucial equity raise. We expect Indus to be a significant beneficiary with ongoing recovery of its past outstanding dues as well as commencement of new tenancy rollouts, which should also enable it to reinstate dividends,” the brokerage said.

Indus Towers’ rental revenue from VI has been a significant risk factor. However, Citi noted that the government-backed restructuring could enhance short-term cash flows and alleviate default concerns. The brokerage remains optimistic about Indus Towers’ long-term growth, supported by rising demand for telecom infrastructure and the expansion of 5G networks.

Citi named Indus Towers its top telecom choice, forecasting a core EBITDA CAGR of 10% (excluding writebacks), fueled by an 8% tenancy CAGR.

“On our FY25-27E forecasts, we expect Indus Towers to deliver a core EBITDA CAGR of 10% excluding writebacks, underpinned by a tenancy CAGR of 8%,” the brokerage firm said.

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