Vodafone Idea Share Price Target: UBS raises target after Bombay HC relief; can the telecom stock finally rebound?

Vodafone Idea Share Price: Vodafone Idea's long-running spectrum dispute received a favourable turn after the Bombay High Court struck down the Centre's one-time spectrum charge demands, with analysts saying the judgment could provide meaningful financial relief for the debt-laden telecom operator if upheld.

Shares of Vodafone Idea were trading at Rs 13.88 on Wednesday afternoon, down 1.84 per cent despite the positive developments.

Global brokerage UBS maintained its 'Neutral' rating on the stock but raised its target price to Rs 15 from Rs 12, reflecting improved sentiment following the court's decision.

Nomura also described the verdict as materially positive for both Vodafone Idea and Bharti Airtel, saying it removes a long-standing legacy overhang that has clouded the sector for years.

Relief from legacy spectrum dispute

The Bombay High Court recently quashed the government's OTSC demands on telecom operators, ruling that the Centre could not retrospectively alter the financial terms of licences years after they were granted.

According to Nomura, the ruling is positive both from an accounting and sentiment perspective, although the financial impact is likely to be more significant for Vodafone Idea than for Airtel.

The brokerage noted that Vodafone Idea has recognised provisions worth about Rs 7,580 crore related to the matter in its FY25 annual report and also carries a contingent liability of around Rs 3,350 crore.

However, Nomura cautioned that the issue is more complex for Vodafone Idea because the provisioned amount includes OTSC liabilities relating to both the erstwhile Vodafone and Idea businesses before their merger.

"The judgment delivered on June 8 provides relief only for the erstwhile Idea portion of the OTSC liability. The hearing related to the former Vodafone entity's OTSC liability remains pending before the Supreme Court," the brokerage said.

Immediate gains may be limited

While the court ruling strengthens Vodafone Idea's position, Nomura does not expect the company to reverse provisions immediately.

The brokerage believes both Vodafone Idea and Bharti Airtel are likely to wait for greater legal certainty before making any accounting adjustments, particularly since the High Court verdict can still be challenged before the Supreme Court.

Even if the company ultimately secures relief, Nomura said the benefit should be viewed in the context of Vodafone Idea's much larger financial obligations.

"The potential reversal is meaningful given Vodafone Idea's negative net worth and weak cash flow profile. However, the OTSC issue represents only a small portion of the company's overall liabilities, which continue to be dominated by substantial AGR and spectrum dues," the brokerage noted.

Focus shifts to key triggers

Nomura retained its 'Neutral' rating on Vodafone Idea with a target price of Rs 12.60, valuing the company at 14 times its estimated FY28 enterprise value-to-EBITDA multiple.

The brokerage said investors will now closely watch a few key triggers, including progress on the company's long-awaited debt funding plans, the pace of subscriber stabilisation and network expansion efforts, and any further government support measures aimed at improving the financial health of the telecom operator.

Despite the legal relief, analysts believe Vodafone Idea's long-term recovery will depend less on legacy disputes and more on its ability to strengthen operations, raise capital and compete effectively against larger rivals in India's telecom market.