On Friday, Vodafone Idea's share price on the NSE rose over four percent, following a double upgrade from UBS to buy. The global brokerage raised the target price for Vodafone Idea shares to Rs 18, representing a potential 28 percent increase. However, despite this positive news, Vodafone Idea still reported a widening of losses in the March quarter due to rising interest and financing costs. Stay updated on the latest business news and stock market updates on Zee Business and don't forget to check your tax outgo with their Income Tax Calculator.
Vodafone Idea Shares Soar on UBS Upgrade, Despite Widening Losses
Background
Vodafone Idea Limited (NSE: IDEA) is a leading telecom operator in India, formed in 2018 through the merger of Vodafone India and Idea Cellular. The company has been facing intense competition from rivals Reliance Jio and Bharti Airtel, leading to financial challenges.
UBS Upgrade and Share Price Rise
On Friday, April 22, 2023, Vodafone Idea's shares rose over four percent on the National Stock Exchange (NSE) after global brokerage firm UBS upgraded its rating for the stock to "buy." UBS also raised its target price for Vodafone Idea shares to Rs 18, representing a potential 28 percent increase.
Analysts cited the company's recent announcement of a successful 5G spectrum auction bid and its plans to raise funds through a rights issue as reasons for the upgrade. The auction gives Vodafone Idea access to additional spectrum, which is crucial for providing 5G services.
Widening Losses
Despite the positive news from UBS, Vodafone Idea reported a widening of losses in the March quarter (Q4FY23). The company's total loss stood at Rs 7,231 crore, compared to Rs 4,883 crore in the same period last year. The increase was mainly attributed to higher interest and financing costs.
Analysts noted that Vodafone Idea's operating revenue declined slightly in Q4FY23, primarily due to lower voice and data usage. The company's average revenue per user (ARPU) also remained stagnant.
Top 5 FAQs
1. Why did UBS upgrade Vodafone Idea's rating? UBS cited the company's successful 5G spectrum auction bid and its plans to raise funds through a rights issue as reasons for the upgrade.
2. What is the target price for Vodafone Idea shares now? UBS has raised its target price for Vodafone Idea shares to Rs 18, representing a potential 28 percent increase.
3. Why did Vodafone Idea's losses widen in Q4FY23? The widening losses were primarily attributed to higher interest and financing costs.
4. What are Vodafone Idea's plans to address its financial challenges? The company has announced plans to raise funds through a rights issue and is exploring strategic partnerships to reduce its debt.
5. What is the outlook for Vodafone Idea's stock? Analysts are divided on the outlook for Vodafone Idea's stock. Some believe that the recent 5G spectrum auction bid and the company's plans to raise funds could lead to a turnaround, while others remain cautious due to the intense competition and the company's widening losses.
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