Vodafone Idea shares jump 14%; Citi still calls it a 'high-risk buy'

Shares of Vodafone Idea Ltd. rallied as much as 14% on Friday, January 30, after brokerages highlighted the positive impact of the government's recent Adjusted Gross Revenue (AGR) relief package on the company's medium-term outlook.

Citi said the AGR relief has strengthened Vodafone Idea's ability to pursue an aggressive three-year investment and growth strategy.

The brokerage said that the relief, which provides material cash flow support for the next 10 years, along with the ongoing reassessment of AGR dues, should accelerate the telco's planned ₹25,000 crore debt raise.

At a recent analyst meet, Vodafone Idea's management outlined plans to invest ₹45,000 crore over the next three years, with an ambition to triple cash EBITDA.

While Citi flagged that the implied 15% revenue CAGR appears ambitious and hinges on execution, tariff hikes and competitive intensity, it said the strategy materially improves prospects for Indus Towers.

Citi said that better visibility on network investments and balance sheet stability at Vodafone Idea should drive new tenancies at Indus Towers and reduce the risk of receivable issues seen in the past.

Key near-term catalysts include the successful completion of Vodafone Idea's bank fundraising and further clarity on AGR reassessment.

These, Citi said, could pave the way for Indus Towers to resume shareholder payouts along with its Q4FY26E results.

Citi maintains a 'Buy' rating on Indus Towers with a price target of ₹515.

Earlier, Citi reiterated Vodafone Idea as a 'High risk buy' while trimming its price target to ₹14 from ₹15.

CLSA, meanwhile, maintained an 'Outperform' rating on Vodafone Idea but cut its target price to ₹11 from ₹12.

The brokerage said that Q3 revenue rose 1% QoQ and 2% YoY to ₹11,300 crore, driven by ARPU growth of 3% QoQ and 6% YoY. However, subscriber losses were higher than expected at 3.8 million during the quarter, taking the total base to 193 million.

Vodafone Idea’s capex stood at ₹6,400 crore for 9MFY26, up 21% YoY, while Q3FY26 cash generation improved 5% QoQ to ₹2,360 crore.

The CEO reiterated that the AGR relief is definitive and long term, and confirmed that reassessment of AGR liabilities has begun.

The company is also engaged with lenders to raise debt for its planned $5 billion investment over the next three years.