Vodafone Idea Share Price and Indus Towers Shares Plunge up to 15% After AGR Setback: Key Highlights

Idea Share Price and Indus Towers Shares Vodafone Idea (VIL) recently reported a massive adjusted gross revenue (AGR) liability of ₹70,300 crore, which includes accumulated interest. However, VIL’s self-assessed AGR…

By Reetam Bodhak

September 19, 2024

2 min read

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Idea Share Price and Indus Towers Shares

Vodafone Idea (VIL) recently reported a massive adjusted gross revenue (AGR) liability of ₹70,300 crore, which includes accumulated interest. However, VIL’s self-assessed AGR liability is significantly lower, at ₹35,400 crore, a 50% reduction compared to the official figure.

The telecom company, along with other industry players, had filed a curative petition with the Supreme Court, seeking a reassessment of the AGR dues, reduction in penalties, and a waiver of interest. The Supreme Court had previously heard the petition on August 30, and the final ruling dismissed the plea for re-evaluation.

Vodafone Idea Share Price Updates

Following the court’s decision, shares of Vodafone Idea and its infrastructure partner Indus Towers took a sharp plunge. Vodafone Idea shares dropped by 15%, hitting the lower circuit limit at ₹10.98 on the BSE. The stock has been under pressure, especially after global brokerage firm Goldman Sachs set a target price of ₹2.50 per share in its base case scenario. Indus Towers also saw a decline of 10%, with its stock price falling to ₹384.80.

Vodafone Idea’s financial challenges are substantial, with a gross debt of ₹2.1 lakh crore. Of this, only $600 million is owed to banks and financial institutions, while the remaining amount is payable to the Indian government towards spectrum and AGR dues. These government dues are currently under moratorium until October 2025. Once the moratorium ends, Vodafone Idea will face significant payment obligations.

In its recent filings, Vodafone Idea projected a repayment obligation of $3.3 billion in FY26, which is expected to rise to $5 billion in FY27, excluding dues not under the moratorium. Goldman Sachs estimates the company’s EBITDA generation post the recent tariff hikes at around $1.5 billion annually. Many stock brokerages had predicted higher target prices for Vodafone Idea shares, assuming potential relief on the AGR front.

Citi analysts speculated that a favourable outcome in the AGR reassessment could have reduced Vodafone Idea’s debt burden by ₹4-5 per share, or even more. However, with the Supreme Court ruling against the reassessment, the company’s financial struggles continue, and its future remains uncertain amid ongoing debt and payment obligations.