Vodafone Idea share price drops 6.5% after Q3 results, hits 3-week low. Should you buy, sell or hold?
Vodafone Idea's stock dropped 6.5% to ₹8.21 despite a reduced Q3 net loss of ₹6,609 crore. ARPU rose to ₹173, yet the user base shrank. The company is in talks for debt financing to support a significant network expansion.
Stock Market Today: Shares of Vodafone Idea tumbled 6.5% in early morning trade on Wednesday, February 12, hitting a three-week low of ₹8.21 apiece. This decline came as the debt-ridden telecom firm missed analysts' revenue estimates in the December quarter, even as it reported a smaller-than-expected loss.
On Tuesday, the company reported a reduction in its consolidated net loss for the December quarter to ₹6,609 crore, compared to ₹6,986 crore in the same period last year. Losses also declined sequentially, as the company had previously reported a consolidated loss of ₹7,176 crore in the July-September quarter.
The company's average revenue per user (ARPU), a key performance metric for telecom firms, rose 4.2% from the previous quarter and 19.3% year-on-year to ₹173, driven by an increase in mobile plan rates.
However, Vodafone Idea's ARPU remains lower than its rivals. In Q3, Reliance Jio's ARPU stood at ₹203.30, while Bharti Airtel’s ARPU was ₹245, both benefiting from tariff hikes.
Vodafone Idea’s user base declined 2.5% sequentially and 7.2% year-on-year to 199.8 million as of December 31, significantly trailing Jio's 482.1 million and Airtel's 414 million.
Revenue from operations for Q3 FY25 reached ₹11,117 crore, marking a 4% increase from ₹10,673 crore in the corresponding quarter of the previous financial year. Meanwhile, the company is in active discussions with lenders to secure debt financing for its planned network expansion investment of ₹50,000–55,000 crore over the next three years.
Tariff hikes key to sustained growth
Anshul Jain, Head of Research at Lakshmishree Investment and Securities, said, “Vodafone Idea reported a reduced net loss of ₹6,609 crore in Q3FY25, down from ₹7,175.9 crore in the previous quarter. The telecom giant saw a 1.7% sequential rise in revenue, reaching ₹11,117 crore, fueled by an improvement in average revenue per user (ARPU).”
"ARPU climbed to ₹173 from ₹166 in Q2FY25, driven by a stronger subscriber mix and higher premium user adoption. The company also posted higher EBITDA of ₹4,712.4 crore, up from ₹4,549.8 crore in the prior quarter. Notably, EBITDA margin expanded to 42.4% from 41.6%, reflecting successful cost optimization. Despite ongoing financial challenges, VIL’s operational improvements indicate a steady recovery trajectory, with further gains dependent on tariff hikes and subscriber retention strategies," he added.
Should you buy Vodafone Idea stock after Q3 results?
Sumeet Bagadia, Executive Director at Choice Broking said, " Vodafone Idea share price has been sustaining above ₹8 apiece, which augurs well for an uptrend. The penny stock may soon touch the ₹12 per share mark on a possible rebound in the technical chart pattern. So, Vodafone Idea shareholders can hold the scrip, maintaining a stop loss at ₹8 per share mark for the short-term target of ₹12 apiece. In contrast, fresh investors can also initiate momentum buying at the current market price for the above-mentioned short target, maintaining a stop loss at ₹8 apiece."
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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