Introduction: Vodafone Idea Share Price Jump After Strong Rebuttal
Vodafone Idea share price surged nearly 4% on Wednesday after the company issued a strong rebuttal against a GST payment notice. The stock rose as much as 3.96%, reaching ₹8.39 on the BSE. This increase followed Vodafone Idea’s challenge to an order issued on February 18, 2025, under the Central Goods and Services Tax (CGST) Act, requiring the company to pay penalty and interest for alleged tax issues from FY 2020-21.
Vodafone Idea Share Price Jump: The Controversial Order Under Section 73
The order, issued under Section 73 of the CGST Act, involves allegations of excess availment of Input Tax Credit and imposes a ₹97,16,875 penalty along with the applicable tax demand and interest. In response, Vodafone Idea strongly contested the claims made in the notice. The company expressed its intent to take necessary steps to rectify or reverse the penalty order. It also clarified that the financial impact would be confined to the tax demand, interest, and penalty.
“We do not agree with the order and will take necessary action for rectification or reversal,” the company stated in its filing to the stock exchange.
Vodafone Idea’s Q3 Performance and Financials
Despite ongoing challenges, Vodafone Idea showed some improvement in Q3 FY25. The company posted a net loss of ₹6,609.3 crore, down from ₹7,175.9 crore in the previous quarter. Its revenue for Q3 FY25 grew by 1.7%, reaching ₹11,117.3 crore compared to ₹10,932.2 crore in Q2 FY25. Additionally, Average Revenue Per User (ARPU) increased to ₹173 from ₹166, QoQ.
On the operational side, Vodafone Idea saw a 3.6% increase in EBITDA, rising to ₹4,712.4 crore from ₹4,549.8 crore in Q2 FY25. The EBITDA margin also improved slightly, standing at 42.4% compared to 41.6% in the previous quarter.
Ongoing Challenges and Market Outlook for Vodafone Idea
The company faces significant challenges, particularly regarding market share. Vodafone Idea’s ARPU remains relatively low, and its subscriber churn rate is high. Brokerage firm Motilal Oswal anticipates that the company’s subscriber base will remain under pressure due to its less competitive subscriber mix. Furthermore, the company’s network infrastructure investments rely on raising debt and receiving continued government support.
Motilal Oswal highlighted the importance of government relief for Vodafone Idea’s long-term survival. “The stabilization of the subscriber base, along with additional relief from the government, is crucial for the long-term survival of Vodafone Idea,” the firm said.
Downgrade and Revised Stock Outlook
Despite its efforts to regain market position, Motilal Oswal downgraded Vodafone Idea shares from ‘Neutral’ to ‘Sell.’ The brokerage firm also lowered its target price for Vodafone Idea’s stock to ₹5 per share. This downgrade was due to concerns over subscriber growth and ARPU. Additionally, the firm reduced its EBITDA estimates for FY26-27 by 7-8%, factoring in weaker subscriber numbers and ARPU projections.
Conclusion: A Crucial Period for Vodafone Idea
Vodafone Idea faces an uncertain future, navigating both operational and financial challenges in a competitive telecom market. While it successfully rebutted the GST payment order, the company must secure strong financial and governmental support to ensure its long-term survival. The recent surge in share price may prove temporary unless Vodafone Idea can significantly improve subscriber growth and market position. Investors should closely monitor the situation for any further developments.
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